Preamble

The House met at half-past Two o'clock

PRAYERS

[Mr. SPEAKER in the Chair]

PRIVATE BUSINESS

Standing Orders

The Chairman of Ways and Means (Sir Charles MacAndrew): I beg to move,
That the several Amendments to Standing Orders relating to Private Business hereinafter stated in Schedule (A) be made.

SCHEDULE (A)—AMENDMENTS TO STANDING ORDERS

Standing Order 28, line 30, leave out "and Fisheries" and insert "Fisheries and Food."

Standing Order 32, line 10, leave out "and Fisheries" and insert "Fisheries and Food."

Standing Order 37, line 16, leave out "and Fisheries" and insert "Fisheries and Food."

Standing Order 39, line 5, leave out "and Fisheries" and insert "Fisheries and Food."

Standing Order 39, line 10, leave out "the Ministry of Food."

Standing Order 39, leave out lines 43 to 45.

Standing Order 101, line 6, leave out "and Fisheries" and insert "Fisheries and Food."

Standing Order 131A, line 4, leave out "printed" and insert "duplicated."

Standing Order 131A, line 4, leave out from "parties" to the end of the Order, and add:

"Provided that the minutes may be printed instead of duplicated if the Chairman of Ways and Means has given authority for printing, on an application made to him by the promoters of the Bill not less than six clear days before the first meeting of the committee."

The first seven Amendments on the Paper are of a drafting nature. The two Amendments to Standing Order 131A are necessary to give effect to Recommendation No. 9 of the Joint Committee on Private Bill Procedure. This recommendation reads as follows:
The Official Shorthand Writer should be Instructed by each House to draw up a scheme under which he would undertake to produce the required number of duplicated copies of evidence taken before the Committees on Opposed Bills.
If the House agrees to this Amendment, minutes of evidence of Private Bill Committees will, as a general rule, be duplicated instead of printed. The Amendment also empowers me to authorise the minutes of evidence to be printed, if the promoters satisfy me that printing is desirable in any particular case.

I am anxious that this particular recommendation should be implemented before Committees on the Private Bills of this Session begin their work. An estimated saving of between £4,000 and £5,000 per Session will be achieved; and I am satisfied, after carefully considering the proposed alteration, that neither the work of Committees, the interests of the parties concerned, nor the records of Parliament will be adversely affected.

The Lord Chairman of Committees in another place is moving an Amendment in similar terms to the Standing Orders of that House.

Mr. Glenvil Hall: I hope that the House will accept these changes. They are in complete accord with the recommendations made by the Joint Select Committee, of which I had the honour to be Chairman.

Question put and agreed to.

Oral Answers to Questions — NATIONAL FINANCE

National Library of Wales

Mr. Watkins: asked the Chancellor of the Exchequer whether he is now in a position to reply to the further representations of the Welsh Parliamentary Party made on 11th January in connection with the National Library of Wales.

The Chancellor of the Exchequer (Mr. Harold Macmillan): Yes, Sir. I have written to the hon. Gentleman.

Mr. Watkins: What can I do, Mr. Speaker, in a situation of this kind? The right hon. Gentleman's letter has only just been received by me. I have not had a chance to look at it. What is the Chancellor's decision with regard to the payment of intermediate scales to the staff of the National Library of Wales?

Mr. Macmillan: I am sorry for the delay. All these things take time. When the hon. Gentleman reads my letter he may like to see me, when I shall be very happy to discuss the matter with him.

Personal Incomes

Mr. Osborne: asked the Chancellor of the Exchequer to give an estimate of the added income payable per week to all adults in receipt of less than £2,000 per year as a result of confiscation of all net incomes over £2,000 and their redistribution to those in receipt of less.

Mr. H. Macmillan: The aggregate net income in excess of £2,000 each of all those whose net income after deduction of Income Tax and Surtax is £2,000 or more is expected this year to be just over £110 million. This would be sufficient, if confiscated and redistributed, to provide about 1s. 2d. a week for every other adult member of the population.

Mr. Osborne: I am much obliged for that answer.

Income Tax (Medical Consultants)

Mr. J. Howard: asked the Chancellor of the Exchequer why the remuneration of specialists attached to hospitals

as consultants is now being assessed under Schedule E instead of under Schedule D as hitherto.

Mr. H. Macmillan: Those assessed under Schedule E are full-time consultants and those whose consulting work cannot be regarded as incidental to private practice. They are so assessed because in the view of the Board of Inland Revenue this is the correct basis of assessment in law.

Mr. Howard: Is my right hon. Friend aware that certain specialists are continuing to practise as consultants in private practice, and that this mode of assessing them may lead to certain inequalities, owing to the difference in the method of assessing Schedule D and Schedule E tax respectively? Would he be kind enough to look into the position again?

Mr. Macmillan: I will look at it again, but it is a purely legal question as to the right interpretation of the law.

Imports

Mr. Russell: asked the Chancellor of the Exchequer what restrictions or regulations, other than Customs duties, still apply to imports from foreign countries.

Mr. H. Macmillan: This information is given in detail in Part 2 of the Customs and Excise Tariff, a copy of which is in the Library. If there is any matter on which my hon. Friend would like particular information, perhaps he would let me know.

Mr. Russell: Can my right hon. Friend say whether it is still the policy of the Government that as much as possible should be bought from Commonwealth countries. If so, how does he propose to persuade importers to carry out that policy?

Mr. Macmillan: That is a broad matter of policy which is implemented by preferences and other methods. As to the details for which he has asked, my hon. Friend will find them in accordance with my Answer.

Mr. Beswick: I agree with the hon. Member for Wembley, South (Mr. Russell) about the desirability of increasing trade with Commonwealth countries, but is the Minister aware that there is another restriction which is not included


in the list to which he refers, namely, the political restriction of imports from Eastern Germany, with which country we could do a useful two-way trade if a different attitude were adopted? Would the Chancellor of the Exchequer look into that aspect of the matter?

Mr. Macmillan: I am always ready to look into anything, but I understand that a certain amount of trade is already going on in that direction.

Mr. Bottomley: asked the Chancellor of the Exchequer what steps he now proposes to take to stop the continuing increase of imports over exports.

Mr. H. Macmillan: I would refer the right hon. Member to the statement which I made on 17th February and the amplification in my speech yesterday.

Mr. Bottomley: I put my Question last week to the President of the Board of Trade, hoping to get a reply before the Chancellor's statement. We are aware that the Chancellor of the Exchequer takes his instructions from the Lord Privy Seal. Are we now to assume that Questions to the President of the Board of Trade must first be answered by the Chancellor of the Exchequer?

Mr. Macmillan: No, Sir. I think that the right hon. Gentleman's assumptions are not really seriously made. He has made his little joke. We had a good debate yesterday on these matters, and we are to have another one today.

Personal Spending (Goods and Services)

Mr. G. Jeger: asked the Chancellor of the Exchequer whether he is aware of the confusion caused by his appeal in general terms to abstain from spending; and whether he will specify those goods or services on which he wishes people to economise.

Mr. H. Macmillan: I am unaware of the existence of the confusion to which the hon. Member refers. The views of the Government on the need for restraint in personal spending on goods and services generally have been repeatedly made known.

Mr. Jeger: Does the right hon. Gentleman not appreciate that many people are in difficulties because they do not know

whether they should economise on their rent by not paying the increases imposed by Government action in order to buy food at the enhanced prices or to go without food in order to pay the rent?

Mr. H. Wilson: Would the right hon. Gentleman give clear advice to many bewildered people who, when they see an I.T.A. advertisement telling them to buy some inessential commodity, also bear in mind that the Chancellor wants them to buy less? Would he say whether they should buy more or buy less?

Mr. Macmillan: I do not see that where the advertisement occurs very much affects the question of advertising. I have read advertisements urging people to buy more things in many newspapers, some of which are connected with the right hon. Gentleman's own party.

Tobacco Tokens

Mr. Paton: asked the Chancellor of the Exchequer what provision he proposes to make for retired persons who lose their tobacco tokens.

Mr. H. Macmillan: I appreciate that there may be hardship in such cases, just as when there is loss of money, but I am afraid it is not possible to make special provision, either by replacement of lost tobacco tokens or otherwise, without risk to the Revenue or without altering the scheme to the disadvantage of the general body of pensioners.

Mr. Paton: Is the Chancellor aware of the very great hardship to poor and old people which arises from the Treasury's rigidity in this matter? Could he not adopt some such device as a declaration before a magistrate as to proof of loss, and for new tokens thereupon to be issued? I hope that the right hon. Gentleman will look at this matter again, in justice to the old people.

Mr. Macmillan: I am always ready, of course, to look at it again, but there are very great technical difficulties.

Government Expenditure (Representations)

Mr. Roberts: asked the Chancellor of the Exchequer what representations he has received during the last six months from taxpayers urging a reduction in Government spending.

Mr. H. Macmillan: I can only say that I have received a large number of such representations, and that I have every reason to hope that a high proportion of my correspondents pay taxes.

Mr. Roberts: Does not the right hon. Gentleman agree that some of the people who are pressing the Chancellor for these changes are those who shouted from the rooftops for the Government to sweep away controls, and are now dissipating their energies or money abroad or sailing in yachts?

Mr. Macmillan: The hon. Gentleman has made his point. I do not suppose he would expect me to add anything.

Autumn Budget

Mr. Chapman: asked the Chancellor of the Exchequer what increase in exports, what reductions in imports, and what easing of the balance of payments position have taken place following the special measures introduced for this purpose in the recent emergency Budget.

Mr. H. Macmillan: I have nothing to add to what I told the House on Friday, and during the course of yesterday's debate.

Mr. Chapman: Does that Answer mean that the last Budget was a waste of time, and that no beneficial results can be traced to it?

Mr. Macmillan: No, Sir. The hon. Gentleman has drawn a wrong conclusion from an insufficient premise.

Mr. Chapman: asked the Chancellor of the Exchequer what decline in home consumption has followed, and is now expected, from the measures introduced in the recent emergency Budget; and how far he estimates the new wage demands made since the Budget will affect the position.

Mr. Lewis: asked the Chancellor of the Exchequer with what success the autumn Budget has achieved the objective of curbing inflation, reducing the cost of living and restoring the purchasing power of the pound.

Mr. H. Macmillan: It is too early to judge the full effects of the autumn Budget. Complete estimates of consumers' expenditure are not yet available

for the fourth quarter of 1955, and it is not yet possible to assess the effect of wage demands made since the Budget.

Mr. Chapman: Is it not clear that wage demands were provoked by that Budget, and is it not also clear from this morning's meeting of the T.U.C. that there is likely to be another round of wage demands arising out of the failure of the Government to consult the trade unions before making their policies known?

Mr. Macmillan: No, Sir. I was very much impressed with rather the opposite in yesterday's debate, and I should like to recognise the spirit in which the right hon. Member for Huyton (Mr. H. Wilson) responded to my appeal.

National Income (Investment)

Mr. W. Wells: asked the Chancellor of the Exchequer what proportion of the national income in 1955 was invested.

Mr. H. Macmillan: I would ask the hon. Member to wait for the publication of the Economic Survey.

Building, Imports and Currency (Control)

Lieut.-Colonel Lipton: asked the Chancellor of the Exchequer (1) whether he will now reimpose building licensing;
(2) what import cuts he has decided on to redress the present adverse balance of trade; and when he will announce them.

Mr. H. Macmillan: As I told the House last week and again yesterday, I do not intend to extend the use of import controls or reintroduce licensing restrictions on building.

Lieut.-Colonel Lipton: In view of the doleful economic situation, is it not true that, while finding it possible to slash local authority housing, the Chancellor finds it both impossible and unnecessary to do anything at all about luxury building?

Mr. Macmillan: We debated this matter all yesterday and we shall debate it all today. Perhaps I had better not add anything more to my Answer.

Sir R. Boothby: asked the Chancellor of the Exchequer whether Her Majesty's Government will now introduce legislation to give them the necessary


powers to exercise an effective control over imports, currency, and new building, by means of Statutory Orders, as and when the occasion demands it.

Mr. H. Macmillan: I would refer my hon. Friend to the reply which my hon. Friend the Economic Secretary gave yesterday to a Question by the hon. Member for West Ham, North (Mr. Lewis).

Sir R. Boothby: Would my right hon. Friend not agree that the account of current building given yesterday by the right hon. Member for Huyton (Mr. H. Wilson) and the detailed figures of imports given by my hon. Friend the Member for Harrow, West (Sir A. Braithwaite), taken together, are rather alarming? Would he consider making a direct approach to industry with the object of achieving some curtailment of unnecessary imports and some restriction of unnecessary building, which at present we cannot afford?

Mr. Macmillan: Yes, Sir, of course I shall carefully consider all these suggestions. I wanted to make it quite clear that I did not intend to introduce legislation.

Mr. Snow: In the absence of a licensing system, how will the Chancellor control or encourage the importation of essential hard-currency-financed commodities? If he has to rely upon finance difficulties and the effect of increased interest rates is he not letting himself into the danger of not obtaining the essential commodities that we require?

Mr. Macmillan: We debated these matters at some length yesterday and we shall debate them again today. I repeat that the main difficulty about import control is twofold. First, it does not go to the root of the problem because it does not remove the amount of money pressing on the system. Secondly, it lends itself to very dangerous retaliation upon our exports.

Credit Policy

Mr. Moss: asked the Chancellor of the Exchequer whether he is aware that many British companies have become self-financing; and what consideration he has given to this fact in estimating the effectiveness of the Bank Rate and credit squeeze upon large concerns.

Mr. H. Macmillan: I would refer the hon. Member to my statement of 17th February, in which I dealt with this aspect.

Mr. Moss: Has the right hon. Gentleman considered the statement made by the Chairman of Lloyds Bank that one of the causes of the limitation of the efficacy of monetary measures is the way in which companies are financing themselves out of their profits? Has he anything more to add to his statement of 17th February, when he said:
I would also appeal to businessmen who are able to finance investment out of their own resources to apply the same tests as to the timing and rate of their investment as if they had to borrow."—[OFFICIAL REPORT, 17th February, 1956; Vol. 548, c. 2677.]

Mr. Macmillan: Yes, Sir. I feel sure that they will respond to that appeal. I would point out that the increased liquidity of a great number of our companies is due to their having followed the principle of limitation of dividends for so many years.

Dame Irene Ward: asked the Chancellor of the Exchequer, in view of the fact that hardship is caused to small customers who are asked to reduce bank overdrafts which were legitimately granted before the credit squeeze, if he will take steps to ensure that his policy is so framed and interpreted so as to protect these people who cannot safeguard themselves.

Mr. H. Macmillan: No instructions have been given to the banks as to how they should reduce their outstanding advances. This has been left to their discretion. But I can assure my hon. Friend that, as I said yesterday, the banks are not concentrating on what is called "the small man."

Dame Irene Ward: While fully supporting my right hon. Friend's new policy, may I ask him if he will try to ensure by every possible means that the small man is not asked to make greater sacrifices than the big man, who is more able to make a contribution?

Mr. Macmillan: Yes, Sir. I think that that is fair.

Viscount Hinchingbrooke: Now that the Bank Rate has risen to a satisfactory level, could not my right hon. Friend review this special and selective bank


squeeze in order that bankers may not in due time turn into Treasury servants?

Mr. Macmillan: I do not think they show any signs of doing that.

Mr. J. T. Price: When the right hon. Gentleman is trying to assess whether or not the credit squeeze is successful from the Treasury point of view, will he bear in mind that some merchant banks are now advertising for public subscription of money at 7 per cent. and lending it in the City of London at a black market rate of 11 per cent.? Has he taken that into account?

Mr. Macmillan: If that is true—and I must accept the hon. Gentleman's statement—I shall be very glad if he will give me some information of it; but all it would seem to show is that at prices of 11 per cent. some of these marginal or inessential projects will probably not proceed.

Foreign Travel Allowance

Mr. G. Jeger: asked the Chancellor of the Exchequer whether, in view of the necessity of conserving foreign exchange, he will make an early statement of his intentions regarding the amount of the foreign currency travel allowance.

Mr. H. Macmillan: I do not intend to make any change in the present allowance.

Mr. Jeger: Is the right hon. Gentleman satisfied that we can export this sterling without any detrimental effect upon our own position?

Mr. Macmillan: One has to watch these things. I repeat that I do not intend to make any change at present.

Industrial Wages

Mr. John Hall: asked the Chancellor of the Exchequer the average industrial wage today; and what wage would be required to give the same purchasing value after the tax as the average industrial wage in 1938.

Mr. H. Macmillan: The average weekly earnings of men aged 21 and over in manufacturing and certain other industries covered by the regular Ministry of Labour inquiries were £3 9s. in October, 1938. A married man with two children would require weekly earnings of £9 2s. at the present time to provide the same

purchasing power, after tax. The actual average earnings in April, 1955, the latest date for which figures are available, were £10 17s. 5d.

Mr. Hall: Is my right hon. Friend aware that the whole House will welcome this further evidence of the improved standard of living of the industrial worker? Will he see if it is not possible to give some relief to the professional and executive classes, whose not inconsiderable contribution to the general welfare has been rewarded, on the whole, by a drastic reduction in true income below the level of 1938?

Mr. Macmillan: All these matters require, of course, careful consideration.

Mr. H. Wilson: Especially after the opening passages of his speech yesterday, would not the Chancellor agree that an average wage of £3 9s. for a family man in 1938 was abysmally low and reflected the unemployment prevailing at that time? Would he not also agree that that figure of £3 9s. itself reflected a great deal of short-time working or underemployment—for instance, in the cotton weaving industry?

Mr. Macmillan: Of course, 1938 was not a year of great unemployment. [Interruption.] No, if I remember aright the worst years were between 1930 and 1935. There were three million unemployed at one period. The worst year was not 1938, which was about one-third of the worst year. All I say is that I am very glad to feel that the whole House, as my hon. Friend has said, rejoices at this improved standard which has come of recent years.

Mr. Wilson: Will not the Chancellor get his figures right—figures which show that in 1938 there was a recession and that the unemployment figures climbed again to about two million in January, 1939? We all agree that the figure of three million occurred in 1933.

Mr. Nicholson: Do the figures given by my right hon. Friend take into account the value of increased social services?

Mr. Macmillan: Oh, no, Sir.

Mr. J. Griffiths: Will the Chancellor break down these figures? Will he indicate the average wage of miners, agricultural workers and a lot of other workers in 1938? Does not the average figure show a completely false position?

Mr. Macmillan: If the right hon. Gentleman puts down a Question asking for details, I will, of course, give them. I was asked for an average, and I have given an average. As the right hon. Gentleman the Member for Huyton (Mr. H. Wilson) so nobly explained to the House yesterday, an average is reached by adding a number of things and then dividing the result by that number.

Steel Company (Sale)

Mr. J. Johnson: asked the Chancellor of the Exchequer the conditions under which Sheffield Forge and Rolling Mills were offered to the public after denationalisation and by what means the sale was advertised.

Mr. H. Macmillan: In the view of the Iron and Steel Holding and Realisation Agency, this Company was not suitable for a public offer of its securities, and in the absence of any approach from the former shareholders, there were informal negotiations with several potential purchasers. In the event the Company was sold privately to Darwins Limited on 18th December, 1953, for £420,000.

Mr. Johnson: Is the Chancellor aware that by former employees of the Sheffield Forge and Rolling Mills this is looked on as an under-the-counter sale and that the Iron and Steel Holding and Realisation Agency did give the firm away at what might be called give-away figures?

Mr. Macmillan: I think that when the hon. Member reflects upon this he will think it a very wrong attack to make on those concerned with this, who have the very highest standards of honesty and honour.

Mr. Gordon Walker: But would not the right hon. Gentleman agree that it is better, none the less, that these things should be seen to be done in an open way, and that if they are done in concealment it is bound to be said that they have been done in concealment, as my hon. Friend said?

Mr. Macmillan: It is bound to be said by people of a certain type or temperament. In fact, the Agency's book value was £276,000. There was, therefore, a profit on the sale of £144,000.

British Petroleum Company (Dividends)

Lieut.-Colonel Lipton: asked the Chancellor of the Exchequer the amount of dividend received by the Treasury from the British Petroleum Company in each of the last two years.

Mr. H. Macmillan: The figures are published in the Finance Accounts of the United Kingdom for the year concerned.

Lieut.-Colonel Lipton: In view of the doleful economic situation, will the Chancellor, as the principal shareholder in this company, ask it not to sabotage the fight against inflation by lavish dividend distribution, even if it is precluded by arrangements with the American Oil Company or other companies from using the increased profits to reduce the price of petrol to British consumers?

Mr. Macmillan: I do not think we can be said to have sabotaged the company. When we came into office all its operations in Abadan had stopped. Now they are working again.

Government Securities (Capital Value)

Mr. Osborne: asked the Chancellor of the Exchequer the estimated loss in capital value on all British Government securities since 2½ per cent. Treasury Stock was issued at par in 1947, and today's prices.

Mr. H. Macmillan: In view of the changes in the volume and composition of the National Debt, no estimate can be given of the total change in the market value of all British Government securities since the date mentioned. My hon. Friend will find figures for the average prices of representative British Government securities in Table 145 of the Monthly Digest of Statistics.

Mr. Osborne: May I ask my right hon. Friend to try to give this figure, since it has been said very many times from the benches opposite that investors made such enormous profits in the last few years? Does not the fact that this 2½ per cent. stock, issued by a Socialist Chancellor at 100, is now about 55, show that investors have not made the huge profits that have been alleged?

Mr. Macmillan: Yes, Sir, but I would prefer my hon. Friend to draw his own conclusions and then present them to us. I do not think I can make this calculation myself—it is complicated—but the broad effect of it is also very apparent to all who study these matters.

Mr. Wade: Arising out of that reply, is the right hon. Gentleman giving any consideration to the unfortunate plight of trustees, who are limited to gilt-edged securities such as this and who, during the last 10 years, have found so-called trustee investments to be some of the riskiest in the whole field of investment?

Mr. Macmillan: Of course, those are matters of concern to trustees. At one point equities seem to be the best to buy and at other times gilt-edged—it changes. I did not want unduly to emphasise the unhappy plight of those who invested in what were popularly known as "Daltons."

Bank Rate (Housing Loans)

Mr. Allaun: asked the Chancellor of the Exchequer how the Government's action in raising the Bank Rate will affect the rate of interest on housing loans issued by the Public Works Loan Board.

Mr. H. Macmillan: The rates of interest for loans from the Public Works Loan Board are not determined by the Bank Rate but reflect the credit of local authorities of good standing in the market for loans of comparable periods.

Mr. Allaun: Is the Minister aware that this, with the ending of subsidy on many houses, will mean an increase in rents of £1 6s. 9d. a week on a £1,750 council house since the 1951 Election? Is this mending the hole in the purse, or is it a deliberate attack on the workers' standard of living?

Mr. Macmillan: It is neither. I remind the House that since the 1951 Election more houses have been built for the people than ever before in our history.

Mr. Lindgren: Is not the right hon. Gentleman aware that already there have been five changes in the rates of interest for local authority operations in the last twelve months? Is he aware that local authorities are very worried, in arranging their programmes, about the effect of the Bank Rate and the frequently fluctuating

rates of interest which, from a purely business point of view, make it almost impossible for them to programme work accurately?

Mr. Macmillan: I do not know what the hon. Member means by "from a purely business point of view." The short-term rates of interest have always in our history gone up and down.

Dollar Securities

Mr. Mulley: asked the Chancellor of the Exchequer (1) the total value of dollar securities at the date of acquisition of those securities compulsorily acquired during the war; and what is their present estimated value;
(2) what proportion of the dollar securities, compulsorily acquired during the war, has since been resold; and for what reason.

Mr. H. Macmillan: It is not the practice to give details of the assets of the Exchange Equalisation Account. I can say, however, that the value of the dollar securities compulsorily acquired during the war was about £190 million and that a substantial proportion of these was sold to pay for the war. I am not prepared to give the present value of the remaining securities.

Mr. Mulley: Will the Chancellor at any rate give an assurance that no further sales of these securities will take place? Is he aware that the current issue of the Midland Bank Review predicts that further sales of these securities are contemplated? Will he at least give an assurance that that is not the case?

Mr. Macmillan: No, Sir. I think I must stand on the position that it has never been the practice of any Chancellor of the Exchequer to give details of this Account.

Short-Term Borrowing

Mr. Grimond: asked the Chancellor of the Exchequer what steps he is taking to control Government short-term borrowing.

Mr. H. Macmillan: I shall take every opportunity both to reduce the amount of Government borrowing and to raise the requirements of the Exchequer by suitable methods.

Mr. Grimond: While not pressing the Chancellor for details of his policy, may I ask him whether it is clear that he intends to try to reduce the issue of Treasury bills and to go in for some form of funding operation?

Mr. Macmillan: As I explained in a passage of my speech, which perhaps the Economic Secretary will be able to amplify, the difficulty is that every year the enormous borrowings for the nationalised industries have to be financed either by Treasury bills or by the issue of fresh loans which press on the market.

Mr. Nicholson: Will my right hon. Friend take this opportunity of correcting the impression which was given, perhaps mistakenly, by the Financial Secretary the other day when he said that Treasury bills are not in themselves inflationary?

Mr. Macmillan: I do not want to enter into the metaphysics of this question, which is very complicated.

New Office Building

Mr. Hunter: asked the Chancellor of the Exchequer whether he is aware of the adverse effect that the amount of new office building now taking place, some of which is of a speculative character, is having on the economic and financial resources of the country; and whether he will take steps to check this speculative building and guide our resources into buildings of a productive character.

Mr. H. Macmillan: I have already told the House that I do not propose to reintroduce a direct control of building. I do not agree that office building is necessarily undesirable or unproductive: offices are needed to strengthen our merchanting and export trades.

Mr. Hunter: Is the Chancellor aware that in November the then Minister of Works told me that £20 million worth of office building was going on in London alone? Is he aware that a large amount of this office building is financial speculation? Is he aware that if he goes round London he will see large boards on these buildings asking for tenants? Apart from the fact that it takes labour from housing and hospitals, is it common sense and in the interests of the nation to allow this office

building to proceed solely in the interests of financial speculators?

Mr. Macmillan: If many of these buildings have notices asking for tenants, and if those notices remain on the buildings for very long, I should think that that would be one of the main methods by which the building of fresh offices would be discouraged. I cannot regard it as wrong that, fifteen years after the war, there should be some attempt to rebuild the City of London. Of that £20 million, as I know very well, because I had to deal with it when I was Minister, a very large proportion is concentrated within the confines of the City of London itself.

Mr. H. Wilson: Does the Chancellor still not appreciate that while some offices are highly essential for the export trade, many offices now being built are not essential at all, and that by the use of building licences he could distinguish between them? Does he not also feel with equal passion that, fifteen years after the war, it is utterly wrong to have a virtual embargo on almost all local government expenditure?

Mr. Macmillan: No, Sir. We have argued about building controls, and we will argue them further. My hon. Friend the Economic Secretary will have something to say about them and will reply to some of the figures which the right hon. Member for Huyton (Mr. H. Wilson) gave yesterday, many of which were completely incorrect. They will be answered; hon. Members must wait for it. I still believe that the method we have adopted is, on the whole, the wisest, and that the other method would not achieve its results rapidly or effectively.

Capital Issues Committee (Guidance)

Mr. Grimond: asked the Chancellor of the Exchequer the details of his new instructions to the Capital Issues Committee.

Mr. H. Macmillan: The Committee is acting on the guidance given to it in my statement of February 17th.

Mr. Grimond: As that statement seems to put on the Committee the onus of making a selection between different projects, may I ask whether the Chancellor is satisfied that this was a fair onus to put on a committee—that of carrying out Gov


ernment policy? If he is, would he not see that the Committee makes detailed reports to the House on how it acts and what decisions it has taken?

Mr. Macmillan: I will consider that. This Committee has a very long record of public service under a very distinguished and able chairman, and I am confident that it carries out its work to general satisfaction.

Treasury Bills (Interest)

Mr. Warbey: asked the Chancellor of the Exchequer if he will give an estimate of the annual saving, at the current average volume of outstanding Treasury bills, if the rate of interest on these bills were reduced to ½ per cent.

Mr. H. Macmillan: The interest paid on the bills issued through the weekly market tender in the last twelve months was £133 million. If those bills had been issued at the rate of ½ per cent. the interest paid would have been £17 million. If they had been issued at nought per cent., the interest would have been nil.

Mr. Warbey: Can the Chancellor say, first, what the additional burden will be through the increase in interest rates to 5¼ per cent.? Secondly, if the Government desire to save in public expenditure, why is it not possible for them to reduce the interest rate to ½ per cent., which the Labour Government managed to do for six years? Would not that be a better way of saving money than stealing the cream out of the pensioners' milk bottles?

Mr. Macmillan: We can argue about monetary policy; we did so yesterday, and we shall do so again today. All I can say now is that the monetary policy which the hon. Gentleman recommends led practically to bankruptcy, to a rapid dissolution of Parliament and to the Government of the day running away from their responsibilities.

Mr. F. M. Bennett: Would not the Chancellor agree that this Question is ridiculous anyway, since no one would lend his money at such a rate at the present time?

£2 Notes

Mr. Remnant: asked the Secretary to the Treasury whether he will now agree to the issue of a £2 note.

The Financial Secretary to the Treasury (Mr. Henry Brooke): No, Sir.

Mr. Remnant: Why is my right hon. Friend so obstinate in this matter? Will he be good enough to consult industry, including, of course, the wage earners and the Banks, to ascertain whether they would both welcome this proposal?

Mr. Brooke: There is at present no evidence of a public need for notes of denominations other than those now in use, but I am always ready to listen to representations.

Miss Herbison: Surely the Minister will reconsider his hon. Friend's representations, since most housewives find that under this Government the £1 note is not valued very highly and that it would be much easier if they had £2 notes?

Mr. Brooke: Without entering into the philosophy of the cost of living, I would point out that there are those who think it is a pity to have notes of too many different kinds lest they be confused.

Oral Answers to Questions — HOUSING

Ex-Service Men

Mr. Dodds: asked the Minister of Housing and Local Government what progress has been made in finding a more satisfactory arrangement for ensuring housing accommodation for ex-Service men and their families on completion of long service in the Armed Forces.

Lieut.-Colonel Bromley-Davenport: asked the Minister of Housing and Local Government if he is aware of the difficulty of many ex-Service men and their families in obtaining housing accommodation especially in country districts in spite of the co-operation of local councils; whether he will give an estimate of the number of such families without adequate accommodation at the present time; and whether he will again consult county councils to see what further schemes can be set on foot whereby such men could apply to them for special treatment.

The Minister of Housing and Local Government (Mr. Duncan Sandys): In a circular last March, I recommended local authorities to relax residential qualifications for Regular ex-Service men, who applied for houses. The results are encouraging. Almost all the local authorities have now replied: 1,302 councils


have stated that either they are already applying the principles I recommended or have now decided to do so in future; 36 authorities have given unsatisfactory replies; 107 have given partially satisfactory replies; seven are in course of reconsidering their practice.

Mr. Dodds: Is not the right hon. Gentleman aware of the widespread hardship caused to long-service men and their families because of their housing problems when they return to civilian life? Does he believe that we shall get rid of wasteful National Service purely by putting up the rates of pay if this fear of being without a home after twenty years' service in Her Majesty's Forces is allowed to remain?

Mr. Sandys: I have said on several occasions that I fully share this anxiety and the feeling that these people are being unfairly treated. That is why I took up the matter most vigorously with local authorities. The results which I have announced today are, as I think the House will agree, most encouraging.

Lieut.-Colonel Bromley - Davenport: Would my right hon. Friend—

Brigadier Prior-Palmer: rose—

Lieut.-Colonel Bromley-Davenport:: Sit down. [HON. MEMBERS: "Oh."] Would my right hon. Friend do all he can—

Mr. W. R. Williams: On a point of order. Is it in order for a lieut.-colonel to give orders to a brigadier?

Mr. Speaker: We know no military ranks in this House; all men are equal here.

Lieut.-Colonel Bromley-Davenport: Would my right hon. Friend do all he can to encourage these priorities, because not to do so would be a great deterrent to recruiting?

Mr. Sandys: I am following up all the replies which are not fully satisfactory.

Mr. Mitchison: Has the right hon. Gentleman made any estimate of the increase in the hardship to ex-Service men to which his cuts in housing subsidies will give rise?

Frozen Water Pipes

Dr. Stross: asked the Minister of Housing and Local Government what consideration he has given to the effect

of frost in causing water carrying pipes and cisterns to freeze up and later burst when thaw sets in; whether he will give an estimate of the total damage sustained by local authority houses in the recent frost; and whether he will advise local authorities as to any method in construction that might avoid similar damage in houses they will build in future.

Mr. de Freitas: asked the Minister of Housing and Local Government whether he will have an inquiry made to see if changes would be necessary in building laws and byelaws to enable houses to be constructed so that the freezing of pipes in winter shall be as rare as it is in other northern countries.

Mr. Sandys: I cannot give any estimate of the damage caused to houses through frozen pipes, but it has certainly been widespread—including my own. This should not be attributed to any defects in the byelaws and still less to any lack of good advice. The trouble is that bye-laws are not always observed and that advice is often ignored. When applying for loan sanction and subsidies for houses local authorities have to sign a certificate stating that the design complies with the provisions of the Housing Manuals, which include detailed guidance about the protection of plumbing against frost.
I am making inquiries to ascertain how extensive the damage has been; and how far recently-built houses have been affected. I also propose to consult the water undertakers as to what more effective methods can be adopted to ensure better observance of the byelaws. In the light of this information, I shall consider what further action should be taken.

Dr. Stross: Whilst thanking the Minister for a reply, which I am sure will give some satisfaction to all those who have suffered in the way in which the Minister himself has suffered, may I ask if he is aware that what he has said implies that there has been serious evasion of byelaws and of advice given? Is it not true that there are substitute materials, such as plastic pipes and other devices which can be used which may not have been covered by byelaws or in the advice given by him to local authorities? Will he consider that and every other possible circumstance?

Mr. Sandys: I am not a technical man, like the hon. Member for Stoke-on-Trent, Central (Dr. Stross), and I do not propose to go into that aspect of the matter. Until I have completed these inquiries I should not like to make an observation as to how far the byelaws have been evaded.

Sir H. Webbe: For the purposes of greater accuracy, will my right hon. Friend remind the hon. Member for Stoke-on-Trent, Central that the burst takes place when the pipe is frozen, not when the thaw sets in?

Mr. G. Jeger: Whilst sympathising with the right hon. Gentleman in his domestic predicament, may I ask if he behaves in private life as in political life, and refuses to take good advice?

Council Houses

Mr. Allaun: asked the Minister of Housing and Local Government (1) if he will give an estimate of the approximate effect of the increased rate of interest and the Government's cut in the housing subsidy on the number of council houses built;
(2) whether he is aware that the Government's action in raising interest rates and abolishing the housing subsidy on many types of houses will increase the rent of large numbers of council houses; and whether he will take steps to safeguard the interests of tenants of such houses.

Mr. Sandys: I dealt very fully with this matter in a number of speeches during the passage of the Housing Subsidies Bill, to which I have nothing to add.

Mr. Allaun: Is the Minister aware of the growing fears among building union leaders of serious unemployment in their industry next year? Will he give reassurance on that point?

Hon. Members: Answer.

Mr. Mitchison: Has the right hon. Gentleman considered the effect of the rise in the Bank Rate since the statements which he made in connection with his Bill? Will he make a statement as to the effect he expects that that will have, at least on authorities who have to borrow in the open market?

Mr. Sandys: The additional rise in the Bank Rate should not have an appreciable effect.

Hon. Members: Oh.

Mr. Allaun: On a point of order. I addressed a Question to the Minister, Mr. Speaker, but he has not replied or made any attempt to reply.

Mr. Speaker: I have no control over that. A Minister is not bound to reply.

Slum Clearance

Mr. Sorensen: asked the Minister of Housing and Local Government in view of the changed economic and financial circumstances of recent months, to what extent he considers his estimate of the number of slum properties that should have been demolished in 1956 will now have to be curtailed.

Mr. Sandys: I have never made any such estimate and, therefore, have no cause to amend it.

Mr. Sorensen: For the purposes of public information, could not the Minister give some indication of how many fewer slum properties will be demolished this year, or, on the other hand, his approximate estimate of the number of slum properties that will be demolished in 1956?

Mr. Sandys: I could not make a guess of that kind.

Mr. Mellish: The right hon. Gentleman has not got a clue.

Joint Schemes, Essex

Mr. Sorensen: asked the Minister of Housing and Local Government what further information he has in respect of collaboration between local authorities, particularly in the County of Essex, to deal jointly with chronic cases of overcrowding or lack of accommodation in any of their contiguous borough areas; and approximately how many houses are now being built or have been built in the last two years by local authorities in Essex outside their own boundaries.

The Parliamentary Secretary to the Ministry of Housing and Local Government (Mr. J. Enoch Powell): Negotiations are proceeding satisfactorily for joint housing schemes at Brentwood, Canvey Island, Billericay and Wickford. Authorities of four other areas have discussed schemes


with the county council. In the last two years over 900 houses have been completed by borough councils outside their boundaries, and nearly 200 are under construction.

Mr. Sorensen: While thanking the hon. Gentleman for that reply, may I ask whether he can indicate what authorities may be pooling their most chronic housing cases? That, surely, is the main point.

Mr. Powell: As I indicated, this kind of co-operation is already in force and is on the increase.

Oral Answers to Questions — LOCAL GOVERNMENT

River Thames (Survey)

Mr. Dodds: asked the Minister of Housing and Local Government if the Water Pollution Research Laboratory has yet completed its survey of conditions in the River Thames; and if he will make a statement as to what action is to be taken to improve conditions in Erith and district.

Mr. Powell: The laboratory has still to complete its calculations. As regards the second part of the Question, my right hon. Friend has nothing to add at present to the statements made in the House before Christmas.

Mr. Dodds: Is the hon. Gentleman aware that trades councils on both sides of the river are to hold an important meeting on this subject in two weeks' time? Can we have more information on this matter before that meeting, as people are fed up with the state of the Thames?

Mr. Powell: It is desirable that the scientific information required by the Committee should properly be collected and assessed.

Mr. Gibson: In view of the importance of this matter, may we take it that the capital expenditure which is necessary effectively to rebuild the outfall works of London at Erith and other places will continue, so that we can be sure of getting a clean river?

Mr. Powell: Oh, yes; London County Council outfall works have a very important bearing on this matter, and are going ahead without any let or hindrance.

Local Authorities (Economies)

Mr. Ridsdale: asked the Minister of Housing and Local Government whether he is satisfied that economy measures requested by the Chancellor of the Exchequer last year to local authorities are being implemented by county councils; whether he will give figures to date of proposed savings by Essex County Council; and how these savings compare with those made by other county authorities.

Mr. Sandys: The figures asked for are not available, but there is no doubt that further restraint in local government expenditure is urgently needed.
Following upon the Chancellor's statement last Friday, I informed local authorities that the Ministers concerned intend for the time being to restrict or withhold loan sanction for many purposes.

Mr. Ridsdale: Is the Minister aware of the intense feeling and anxiety with regard to local government expenditure now that the new rating assessments have taken place? Would he assure the House that he will keep a careful watch on local authorities to see that they do not use the new lower rate poundage as a springboard for further local government expenditure?

Mr. Sandys: Local government capital expenditure amounts to about £470 million a year, and it is quite clear that local authorities must make their contribution towards the winning of the battle against inflation.

Mr. Sorensen: Is the Minister aware of the substantial amount saved by Essex County Council by transferring its banking facilities to the C.W.S. Bank when under a Labour administration?

Mr. Lindgren: Would the Minister not agree that the greater proportion of the increased charges now placed on local authorities arise, not from increased work, but from the increased interest charges that they now have to meet as a result of the monetary policy of the Government?

Green Belt, London

Mr. Russell: asked the Minister of Housing and Local Government when he proposes to fix the exact boundaries of the Green Belt around London.

Mr. Sandys: The limits of the Green Belt are settled as part of the development plans of the counties concerned. Pending the approval of these plans the areas proposed as green belts are being vigilantly protected.

Mr. Russell: Can my right hon. Friend say what has been achieved in the last year or so in preserving the London Green Belt?

Mr. Sandys: During the last calendar year, apart from a few houses on isolated plots, authorised mainly for agricultural reasons, I have approved applications for building in the London Green Belt on only about 45 acres and have refused applications involving over 2,000 acres.

Mr. Ede: When is the right hon. Gentleman likely to announce his decisions on the development plans for the various Home Counties?

Mr. Sandys: Some have been announced, one will be announced shortly and another will be coming along a little later after that.

Essex Development Plan

Mr. B. Harrison: asked the Minister of Housing and Local Government when he is likely to be able to give his consent to the Essex Development Plan, and his decision on the objections raised.

Mr. Powell: My right hon. Friend cannot forecast a precise date, but there will be no avoidable delay.

Mr. Harrison: While thanking my hon. Friend for that reply, may I ask whether he does not realise that there has already been a very great delay and that the whole development of towns like Witham, in Essex, is held up because the appeals have not been dealt with expeditiously by his Department?

Mr. Powell: There is no reason why individual applications for permission should not be dealt with in advance of the approval of a development plan. I ask my hon. Friend to remember that the public inquiry into this plan lasted six months.

Industrial Derating

Mr. Awbery: asked the Minister of Housing and Local Government if he is aware that the derating of industrial hereditaments was introduced to assist industry when it was passing through a slump; that industry is now making record profits; that the rate burden on householders is becoming excessive; and whether he will therefore hasten his consideration of the question of industrial derating.

Mr. Sandys: The question of industrial derating is a major issue of economic policy. It is being examined, together with other related problems, as part of a comprehensive review of local government finance. This will necessarily take some time.

Mr. Awbery: Is the Minister aware that all the county councils, borough councils and urban district councils are against this system of derating, and regard it as a subsidy to a flourishing industry? Will the right hon. Gentleman have regard to this when he considers reducing the subsidies?

Mr. Sandys: Yes: as I have already assured the House on an earlier occasion, in the course of the review, naturally, an opportunity will be given to the representatives of local authorities to express their opinions on this important question.

Dame Irene Ward: Would my right hon. Friend, for our information, circulate in the OFFICIAL REPORT, a statement on the position of local authorities in relation to derating after the appropriate equalisation grants have been taken into consideration? Am I not right in assuming that some local authorities would gain if derating were done away with, whereas some other local authorities would lose? Is it not very important that we should know exactly how local authorities stand in this matter?

Mr. Sandys: If my hon. Friend will put a Question on the Order Paper, I will gladly consider her suggestion.

Mr. Blenkinsop: In view of the very big changes which are taking place as a result of the present assessment, is it not essential to have a decision on this question to work in parallel with those changes?

Mr. Sandys: I do not think that it would be possible to take a decision on this major issue except as part of a review of the whole structure of local government finance, which is at present being undertaken.

Oral Answers to Questions — WASHINGTON DECLARATION AND COMMUNIQUE (WHITE PAPER)

Mr. Emrys Hughes: asked the Prime Minister if he will publish a White Paper on his recent negotiations with President Eisenhower.

The Prime Minister (Sir Anthony Eden): A White Paper is being published today containing the texts of the Washington Declaration and the communiqué. The texts of the recent correspondence between President Eisenhower and Mr. Bulganin have been placed in the Library of the House.

Mr. Hughes: Can the Prime Minister assure us that there will be no inflation in the White Paper, in that in the Washington communiqué there were too many words chasing too few ideas?

The Prime Minister: I hope that the hon. Gentleman did not have to spend too long working that one out.

Oral Answers to Questions — THERMO-NUCLEAR WEAPONS

Mr. Mason: asked the Prime Minister what consideration was given to the banning of the thermo-nuclear tests by international agreement during his discussions with President Eisenhower.

The Prime Minister: I would refer the hon. Member to the statement I made on 13th February, to which I have nothing to add.

Mr. Mason: While I realise that the Prime Minister is hesitant on this matter because we are about to test a hydrogen bomb, may I ask if he realises that an agreement would take time to conclude? When will the right hon. Gentleman really act in this matter? To what extent has the Prime Minister received official intimation of the willingness of Russia to co-operate in banning all thermo-nuclear tests?

The Prime Minister: The second part of the supplementary question encroaches on two Questions on the Order Paper which have yet to be answered. I dealt with the first part of the supplementary question in my statement, and I have nothing to add to that today.

Mr. Warbey: asked the Prime Minister whether, in view of the fact that Mr. Khrushchev has officially proposed an agreement to ban tests of thermo-nuclear weapons only, excluding other nuclear weapons, he will now invite the principal Governments concerned to confer on ways and means of implementing such a ban.

Mr. K. Robinson: asked the Prime Minister if his attention has been called to the official statement of Mr. Khrushchev, in a speech opening the Communist Party Congress on 14th February, that the Union of Soviet Socialist Republics was agreeable to the ending of experimentation with thermonuclear weapons; and if he will now explore, in conjunction with our American Allies, the possibility of reaching international agreement on this subject.

The Prime Minister: Her Majesty's Government have received no official approach on this subject from the Soviet Government.
From reports of Mr. Khrushchev's statement to the Communist Party Congress, it appears that he was considering the question of tests in the context of disarmament. This, in the view of Her Majesty's Government, is the proper framework for consideration of this problem. I would, however, remind the House of the difficulties of establishing effective controls. This is the crux of the problem, and I note that Mr. Khrushchev did not suggest any way of meeting this difficulty.
If the Soviet Government have formal and concrete proposals to put forward, there will be an opportunity for them to make their views known officially when the Disarmament Sub-Committee meets early next month.

Mr. Warbey: Can the Prime Minister say, first, whether he knows of any way of testing a thermo-nuclear weapon without the fact being discovered in every part of the world? Secondly, in view of the fact that Mr. Khrushchev's statement was made in the context of partial steps in


advance of a general disarmament convention, will the Prime Minister look at the matter again and adopt a more forthcoming attitude than he did in his statement on the Washington talks?

The Prime Minister: I do not think that my attitude is unforthcoming. My attitude is that I know that the Soviet Government, having had a series of tests, propose that everybody else should stop theirs. That is quite an interesting proposal, and I am perfectly ready to discuss it, provided that we can work out a reasonable system of control. The other thing I brought back—quite clearly, I thought—from Washington was that if tests are carried out under effective control—that is, intelligently and carefully carried out—the danger which was thought to exist is now believed by scientific opinion to be very much less. I ask the House to be good enough to await the medical reports which will be published about that both in this country and in the United States.

Mr, Stokes: Following what the Prime Minister has implied, may I ask whether he has seriously considered the possibility of starting discussions on this subject on the basis that there should be a limited number of bangs by each country, after which there should be none? Has this been considered?

The Prime Minister: The right hon. Gentleman, I think, will know, without plagiarism, that something of that kind was suggested by me some time ago. The difficulty of these matters is really that of control. The hon. Member for Ashfield (Mr. Warbey) asked whether it was possible for an explosion not to be discovered. I should like notice of that; it clearly depends upon the size of the

explosion. What the right hon. Member for Ipswich (Mr. Stokes) has said is not absent from my mind. I think he will agree that it is related to what the effect of these tests may or may not be on the health of the nation as a whole.

Mr. Robinson: The Prime Minister is very hesitant about this today. Hitherto, there has been no suggestion that it was not possible to detect any nuclear explosion anywhere in the world. This is something new which we are hearing for the first time. Why is the Prime Minister not prepared to take the initiative? Does he recall that the last time there was a proposal from the Soviet Union, he said it was unofficial because it was made by Moscow Radio? Could anything be more official and definite than a statement made by Mr. Khrushchev at the Communist Party Conference?

The Prime Minister: Certainly, Mr. Khrushchev made this statement—and I welcome it—following on the tests which the Soviet Government have just completed. It is equally true that Mr. Khrushchev had not dealt with the difficult problem of controlling the tests. We all know that it exists. It is to discuss this kind of thing that the Disarmament Sub-Committee meets next month. I should have thought that that was the right place, and not at Question Time, to try to work out these difficult matters.

BUSINESS OF THE HOUSE (SUPPLY)

Ordered,
That this day Business other than the Business of Supply may be taken before 10 o'clock.—[The Prime Minister.]

MARRIAGE (SCOTLAND)

3.31 p.m.

Mr. Cyril Bence: I beg to move,
That leave be given to bring in a Bill to amend the law of Scotland with regard to notice of intended marriage.
The object of the Bill is to enable civilian men and women outside Scotland, and whose parents live in Scotland, to have the same marriage facilities as exist for men and women serving in Her Majesty's Forces outside Scotland, but whose parents live in Scotland. It seeks to enable them to have banns of marriage called in the parish where their parents live without fulfilling a 15 days' residential qualification. In other words, its object is to place these men and women in exactly the same position as those serving in Her Majesty's Forces.
I have personal experience of a case where a young man serving in the Armed Forces was able to have his banns called in a parish church in Scotland whereas another young man who was, in fact, employed by Her Majesty's Government in a civil department, in Manchester, could not have his banns called in Scotland because he did not have the 15 days' residence qualification. The Bill would provide that the son or daughter of parents, or a surviving parent, living in Scotland could have banns called in the parish church of the parish where the parents or surviving parent were living at the time of the intended marriage and have the marriage solemnised in Scotland, after due calling of the banns, without a 15 days' residence qualification.
It has been brought to the notice of many of us that resort has been had to many subterfuges to overcome this disability of the 15 days' qualification. I have heard that once a suitcase was deposited in a place in Scotland in order to establish a 15 days' residence qualification. Only the other day a case was

brought to my notice in which a very prominent lawyer went to his local minister and was informed by him that the banns of marriage could be called without the 15 days' residence qualification, but the clerk of that church informed him that they could not be called.
That state of affairs still exists and a good deal of subtlety is employed to try to overcome the 15 days' qualification. I am sure that hon. Members on both sides of the House would feel that it would be well worth while to enable young men and women working in the United Kingdom outside Scotland, who had only two weeks' annual leave from their employment, to have their marriage celebrated in Scotland at the beginning and not the end of their holiday.
It is unfair that a man or woman serving in the Armed Forces can celebrate marriage at the beginning of annual leave from the Forces whereas, in the case of a young man and woman in civil employment, including the Civil Service, one of them has to spend 15 days in Scotland out of his or her annual holiday before being able to get married at the end of that holiday. I am sure that many of us in the House, particularly those who are married, would have great sympathy with these people. The Bill is narrowly drawn. It strives to achieve equality between serving men and women and those who are not in Her Majesty's Forces.
Question put and agreed to.
Bill ordered to be brought in by Mr. Bence, Mr. Grimond, Mr. John MacLeod, Mr. Malcolm MacMillan, Mrs. Mann, Lady Tweedsmuir and Mr. Timmons.

MARRIAGE (SCOTLAND)

Bill to amend the law of Scotland with regard to notice of intended marriage, presented accordingly and read the First time; to be read a Second time upon Friday, 2nd March, and to be printed. [Bill 101.]

Orders of the Day — SUPPLY

[1ST ALLOTTED DAY]

Considered in Committee.

[Sir CHARLES MACANDREW in the Chair]

CIVIL ESTIMATES AND ESTIMATES FOR REVENUE DEPARTMENTS TOGETHER WITH ESTIMATE FOR THE MINISTRY OF DEFENCE, 1956–57

(VOTE ON ACCOUNT)

Resolved,
That a sum, not exceeding £1,015,637,000, be granted to Her Majesty, on account, for or towards defraying the charges for the following Civil and Revenue Departments and for the Ministry of Defence for the year ending on the 31st day of March, 1957, viz.:

CIVIL ESTIMATES

CLASS I




£


1.
House of Lords
48,000


2.
House of Commons
370,000


3.
Registration of Electors
300,000


4.
Treasury and Subordinate Departments
1,350,000


5.
Privy Council Office
11,000


6.
Privy Seal Office
5,380


7.
Charity Commission
34,000


8.
Civil Service Commission
147,000


9.
Exchequer and Audit Department
183,000


10.
Friendly Societies Registry
27,000


11.
Government Actuary
16,000


12.
Government Chemist
106,000


13.
Government Hospitality
20,000


14.
The Royal Mint
10


15.
National Debt Office
10


16.
National Savings Committee
260,000


17.
Public Record Office
38,000


18.
Public Works Loan Commission
10


19.
Royal Commissions, etc.
70,000


20.
Secret Service
1,700,000


21.
Silver
1,800,000


22.
Tithe Redemption Commission
10


23.
Miscellaneous Expenses Scotland:
68,000


24.
Scottish Home Department
530,000


25.
Scottish Record Office
13,000

CLASS II


1.
Foreign Service
5,500,000


2.
Foreign Office Grants and Services
10,000,000


3.
British Council
800,000


4.
United Nations
1,450,000


5.
Commonwealth Relations Office
780,000


6.
Commonwealth Services
680,000


7.
Oversea Settlement
66,000


8.
Colonial Office
450,000

£


9.
Colonial Services
7,500,000


10.
Development and Welfare (Colonies, etc.)
5,000,000


11.
Development and Welfare (Federation of Rhodesia and Nyasaland, and South African High Commission Territories)
460,000


12.
Imperial War Graves Commission
440,000

CLASS III


1.
Home Office
1,180,000


2.
Home Office (Civil Defence Services)
3,800,000


3.
Police, England and Wales
12,860,000


4.
Prisons, England and Wales
2,850,000


5.
Child Care, England and Wales
2,260,000


6.
Fire Services, England and Wales
1,338,000


7.
Carlisle State Management District
10


8.
Supreme Court of Judicature, etc
50,000


9.
County Courts
220,000


10.
Legal Aid Fund
600,000


11.
Land Registry
10


12.
Public Trustee
10


13.
Law Charges
185,000


14.
Miscellaneous Legal Expenses
42,000



Scotland:



15.
Scottish Home Department (Civil Defence Services)
238,000


16.
Police
42,000


17.
Prisons
265,000


18.
Approved Schools
84,000


19.
Fire Services
15,000


20.
State Management Districts
10


21.
Law Charges and Courts of Law
92,000


22.
Department of the Registers of Scotland
10



Ireland:



23.
Supreme Court of Judicature, etc., Northern Ireland
20


24.
Irish Land Purchase Services
600,000

CLASS IV


1.
Ministry of Education
93,000,000


2.
British Museum
222,000


3.
British Museum (Natural History)
100,000


4.
Imperial War Museum
18,500


5.
London Museum
9,500


6.
National Gallery
33,000


7.
Tate Gallery
26,000


8.
National Maritime Museum
17,000


9.
National Portrait Gallery
9,000


10.
Wallace Collection
11,500


11.
Grants for Science and the Arts
660,000


12.
Universities and Colleges, etc., Great Britain
17,000,000


13.
Broadcasting
7,200,000



Scotland:—



14.
Public Education
17,150,000


15.
National Galleries
14,000


16.
National Museum of Antiquities
7,500


17.
National Library
35,500

CLASS V




£


1.
Ministry of Housing and Local Government
6,300,000


2.
Housing, England and Wales
13,000,000


3.
Exchequer Grants to Local Revenues, England and Wales
24,600,000


4.
Ministry of Health
12,000,000


5.
National Health Service, England and Wales
154,700,000


6.
Medical Research Council
900,000


7.
Registrar General's Office
136,000


8.
Central Land Board
130,000


9.
War Damage Commissions
220,000



Scotland:—



10.
Department of Health
2,075,000


11.
National Health Service
17,162,000


12.
Housing
6,234,000


13.
Exchequer Grants to Local Revenues
3,290,000


14.
Registrar General's Office
19,000

CLASS VI


1.
Board of Trade
1,522,000


2.
Board of Trade (Assistance to Industry and Trading Services)
916,000


3.
Board of Trade (Strategic Reserves)
2,170,000


4.
Services in Development Areas
2,000,000


5.
Financial Assistance in Development Areas
150,000


6.
Export Credits
10


7.
Export Credits (Special Guarantees)
10


8.
Ministry of Labour and National Service
7,069,000


9.
Ministry of Supply
70,000,000


10.
Ministry of Supply (Purchasing (Repayment) Services)
10


11.
Royal Ordnance Factories
2,000,000

CLASS VII


1.
Ministry of Works
2,810,000


2.
Houses of Parliament Buildings
120,000


3.
Public Buildings, etc., United Kingdom
9,436,000


4.
Public Buildings Overseas
588,000


5.
Royal Palaces
170,000


6.
Royal Parks and Pleasure Gardens
261,000


7.
Historic Buildings and Ancient Monuments
295,000


8.
Rates on Government Property
7,800,000


9.
Stationery and Printing
5,250,000


10.
Central Office of Information
600,000


11.
Peterhead Harbour
13,000

CLASS VIII


1.
Ministry of Agriculture, Fisheries and Food
5,500,000


2.
Agricultural and Food Grants and Subsidies
90,000,000

£


3.
Agricultural and Food Services
4,000,000


4.
Food (Strategic Reserves)
2,800,000


5.
Fishery Grants and Services
1,600,000


6.
Surveys of Great Britain, etc.
990,000


7.
Office of Commissioners of Crown Lands
33,000


8.
Agricultural Research Council
1,500,000


9.
Nature Conservancy
120,000


10.
Development Fund
400,000


11.
Forestry Commission
3,200,000



Scotland:—



12.
Department of Agriculture
7,750,000


13.
 Fisheries (Scotland) and Herring Industry
860,000

CLASS IX


1.
Ministry of Transport and Civil Aviation
2,981,000


2.
Roads, etc., England and Wales
15,700,000


3.
Transport (Shipping and Special Services)
243,000


4.
Civil Aviation
2,300,000


5.
Ministry of Fuel and Power
1,350,000


6.
Ministry of Fuel and Power (Special Services)
2,700,000


7.
Atomic Energy
30,000,000


8.
Department of Scientific and Industrial Research
2,517,000


9.
Roads, etc., Scotland
2,420,000

CLASS X


1.
Superannuation and Retired Allowances
5,050,000


2.
Ministry of Pensions and National Insurance
1,500,000


3.
War Pensions, etc.,
32,250,000


4.
National Insurance and Family Allowances
73,500,000


5.
National Assistance Board
43,500,000


6.
Pensions (India, Pakistan and Burma)
2,850,000


7.
Royal Irish Constabulary Pensions, etc.
380,000



Total for Civil Estimates
894,407,000

REVENUE DEPARTMENTS


1.
Customs and Excise
4,930,000


2.
Inland Revenue
12,600,000


3.
Post Office
98,300,000



Total for Revenue Departments
115,830,000



Ministry of Defence
5,400,000



Total for Civil Estimates and Estimates for Revenue Departments together with Estimate for the Ministry of Defence
1,015,637,000

Resolution to be reported Tomorrow.

Report to be received Tomorrow.

Committee to sit again Tomorrow.

Orders of the Day — ECONOMIC SITUATION

Order read for resuming adjourned debate on Amendment to Question [20th February]:
That this House affirms its confidence in the measures announced by Her Majesty's Government to deal with the economic situation.—[Mr. H. Macmillan.]

Which Amendment was to leave out from "House" to the end of the Question and to add:
recalling that the policies of the Government have held back our exports, swollen our imports, forced us into a balance of payments deficit, helped to reduce our reserves by a quarter and driven up our domestic price level, has no confidence in Her Majesty's Ministers or in the measures now proposed by them to overcome the economic crisis."—[Mr. H. Wilson.]

Question again proposed, That the words proposed to be left out stand part of the Question:—

3.39 p.m.

Mr. Douglas Jay: We are debating today the economic consequences of the Lord Privy Seal. Indeed, we can well understand, since hearing the present Chancellor's speech on Friday, why it was that the previous Chancellor was so anxious to hurry away from the Treasury before Christmas. The decisions of the new Chancellor seem to us fully worthy to rank, in their utter misunderstanding of the situation facing the country, with the extraordinary blunders of the present Lord Privy Seal last year.
First of all, the new Chancellor's measures are monstrously unfair; secondly, in my view, they are a breach of faith by the party opposite with the old-age pensioners of this country; thirdly, they are likely to make the balance of payments crisis worse and not better; and, finally, these measures should not have been necessary at all. First, they are unfair because they press hardest at every point on those least able to make sacrifices. It is almost incredible, even for a Tory Government, that having given tax concessions of £200 million to profits in the last few years, having given £150 million to Income Tax reliefs, mainly to the larger incomes and profits, in the April Budget of last year, having imposed a £100 million increase in insurance contributions on the wage earners last summer, and, in addition, an extra £40

million Purchase Tax burden on the housewife in October, the Government are now going to load this extra £38 million in taxes on bread and milk on the wage earners and housewives.
A rise in the price of bread is the most extremely reactionary and regressive measure which any Government can take, because, of course, the very poor spend not merely a higher proportion of their incomes, but a higher absolute amount, on bread than people who are better off. I calculate altogether that, in the past 12 months, after allowing for the 2 per cent. or so rise in Treasury bill interest in that period, which goes largely to the wealthy lending institutions, the poorer section of the community have borne an extra burden of about £150 million a year, and that the wealthier section have enjoyed a net gain of just about the same amount. That, of course, is a purely reactionary transfer of the national income inspired—if by anything—by class prejudice; and it has nothing to do with the crisis at all.
Secondly, it is surely a breach of faith with the old-age pensioners for the Chancellor to come to this House and deliberately raise the prices of bread and milk, without any compensatory rises in retirement pensions, National Assistance or Family Allowances. The official Tory Party Election manifesto called, "This is the Road," issued in 1950, said this:
In any approach to the problem of food subsidies, made necessary by the urgent need to improve the purchasing power of the £"—
whatever that may mean—
we should be bound by this pledge. There will be no reduction which might influence the price of food without compensating increases to those most affected. These compensations will take the form, on the one hand, of larger Family Allowances, pensions and other social benefits, and, on the other hand, reductions of taxation…
That pledge was repeated in the 1951 manifesto. At least, the previous Chancellor, in his 1952 Budget, when he made the first cut in the food subsidies, made some pretence of honouring at least half of his words. The country will note with interest that the present Chancellor has, so far, not even attempted to do that.
Thirdly, in our view, this policy will not work, because the organised wage earners of today will not tolerate being treated as they were treated by Tory Governments before 1939. On the one hand, luxury building and imports are


to go on; on the other, exports, so far from being encouraged, will be held back still further by these measures. According to Boyle's law, about which we have heard so much lately, the idea is that the rise in the price of bread and milk is to prevent poorer people buying other things like shoes, clothes and furniture.
But the trouble is that Boyle's law, unhappily for the present Government, does not work in the conditions of the post-war world, for this reason. The additional one point rise in living costs, added to the rise of last autumn, will certainly raise wages, export costs and prices at a very critical moment in a very competitive world. I would say that the most important single lesson in economic policy in our post-war history is this: it is the Government's job to keep the cost of living stable; and, if it does that, then the unions and industry can play their parts. But this Government, utterly disregarding that lesson, comes along and raises food prices.
The Chancellor yesterday made what sounded to me a rather mock heroic appeal to industry for general restraint. But the tragedy is that the Government's grossly reactionary policy in the past two years, and, above all, its huge and gratuitous tax reliefs to the wealthy sections of the country in last April's Budget, have taken all moral force out of that appeal.
I ask hon. Members opposite whether, after this budgetary action last year, they expect the wage earners to accept a cut in their real wages? Do the Government expect that or not? If they do not expect it, is not the rise in food prices absolutely bound to increase the cost of our exports? I think that the only reasonable expectation is that, in the face of the Lord Privy Seal's policy over the past year, a further rise in money wages is now inevitable. Indeed, there is nothing immoral in our saying that, because in certain industries, such as steel, the rise in wage rates is automatic and follows the cost of living.
I believe that there are nearly 2 million workers whose wage rates will be automatically raised following the action the Government took last week; and, of course, there will be rises as the result of collective bargaining in other industries. I must say that, after the last two

Budgets, and after this further cut in the food subsidies, the whole responsibility for the consequences will rest with this Government, who have now thrown away all vestiges of collective restraint.
That is the main reason why, in my view, these proposals will not work. But another reason is this Government's pathetic and almost superstitious belief in the Bank Rate as a cure-all for all our ills, and their doctrinaire refusal even now, when some of their own supporters are urging it, to use any key physical controls at all. I believe that the Bank Rate has a part to play in disinflation, if it is used intelligently and backed up by other weapons, both monetary and physical. But, used as the Lord Privy Seal used it in the last few years, as a sort of magic fetish, which neither he nor anybody else is supposed to try to understand, I see three heavy objections to it.
First, it is ruinously expensive. Does the House realise that the rise of 4i- per cent. in Treasury bill interest since 1951 has meant an increase in Government expenditure of nearly £250 million a year, and that the total expenditure on the debt interests—the Economic Secretary to the Treasury can correct me if I am wrong—must now be about £700 million; and that that is more than the total of the Health Service, the Exchequer contribution to National Insurance and National Assistance together?
I wonder whether the Chancellor realises that the decision last week to raise the Bank Rate by 1 per cent. will add nearly £50 million a year to Government expenditure, or substantially more than the whole saving gained by cutting the milk and bread subsidies? I think that puts it in perspective. In addition, perhaps a third of this debt interests bill is a burden on the balance of payments as well as on the Budget. This ever-increasing Treasury bill rate is the real reason why Government expenditure has been increasing twice as fast under this Tory Government as it did under the Labour Government.
What do we get in return for this fearful burden? I must say that the banks, in spite of the huge receipts they get themselves, have been extremely slow to make any cut in advances or any cut in deposits as a result. I ask the Government, if they really believe in the credit squeeze as the great panacea for all our ills, why they


do not make it effective, for instance, by sales of Government securities or by changes in reserve ratios as was recommended by an hon. Gentleman opposite only last week? After all, the Americans do both those things successfully, and if we are to rely on dear money I do not see why we should not imitate them in that respect.
My second objection to dear money policy on its own is that, if it works, all it does is to cut down investment and leave consumption largely unchanged. Indeed, the main trend of the previous Chancellor's policy last year, with his £150 million Income Tax cut, simultaneously with a high Bank Rate, was to expand consumption and to depress investment. What a disastrous and deplorable policy that is! One of our main charges against the Government today is that, in this eleventh year after the war, when the United States and Russia and many other countries are far outstripping us in technical development, we are driven by the sheer incompetence of the Government's policy to cut down investment in order to get out of a balance of payments crisis in the middle of a world boom.
Thirdly, it is also a serious defect of the credit squeeze that it has almost entirely failed to do the one thing that it was designed to achieve; that is, either to limit imports or to encourage exports. It may conceivably have tempted some foreign money here, or reduced our holding of imported stocks. But that really is what the Chancellor yesterday called attacking the symptoms and ignoring the cause—and. I think he also said, rubbing out the spots in order to cure the chicken pox. It merely conceals the trouble instead of curing it.
I say that these measures are both unfair and ineffective. We also believe that none of them would have been necessary in 1956, but for the blunders of the previous Chancellor last year. I propose to back up that charge with chapter and verse, and to trace the crescendo of errors which have brought the country to its present critical situation. We have now had ten years' experience of facing our post-war economic problem of trying to achieve together full employment, price stability and a surplus on our balance of payments; and it is right for us in this House to make a serious effort in this

debate to learn some of the lessons of that experiment.

Sir Robert Boothby: We are all to blame.

Mr. Jay: In some respects, perhaps; but we in the Labour Government tried for six years up to 1951, by the general policy of restraint, of deliberate concentration on exports and investments and by the deliberate organisation of our resources. Since then we have had five years of all round relaxation and of ever increasing laissez faire.
I suggest that the evidence proves unmistakably that the policy of purposive steering of the economy was far more successful, and that the ever increasing unplanned scramble of the last five years has wasted our resources on a huge scale and landed us in an ever more perilous position. I propose to show this by the facts, ignoring rather meaningless interjections.
I take two tests which hon. Gentlemen can criticise afterwards if they like. The first is the extent to which prices have been stabilised in this country, despite changes in world prices. The second is the volume of exports and production during the two periods. First, let us look at prices. Here, I must use as my text the famous passage in the Tory Election manifesto of 1951:
A Government will be judged by the effect of its programme on rising costs and prices.
I am glad to be able to compliment the Lord Privy Seal on that apt and eloquent sentence, if I cannot compliment him on anything else today.
The fact is that in the two years of the Labour Government ending in the third quarter of 1951, import prices rose by 66 per cent., and the cost of living rose by only 14 per cent. In the four years from December, 1951, to December, 1955, import prices were down—and they are still down today, by 7 per cent.—and the cost of living was up by 23 per cent. Clearly, and beyond dispute, that further rise in living costs since 1951 has been due to internal United Kingdom Government policy, to the cuts in subsidies, the rises in rents, the new taxes on necessities and the general stoking up of excessive demand.
If hon. Gentlemen dispute that, let them compare this 23 per cent. rise in living costs here since 1951 with what


has happened in other countries during the same period. My right hon. Friend the Member for Huyton (Mr. H. Wilson) gave some figures yesterday and I will illustrate this in a different way. In a number of industrial countries in that period the rise has been less than 5 per cent. over five years—in Canada, Belgium and Switzerland. The outstanding and astonishing fact is that the rise in living costs here since 1951 has been steeper than in any of the following countries—the United States, Switzerland, Sweden, Norway, Holland, Japan, Italy, Germany, France, Denmark, Canada and Belgium. A year ago there was one country that had done worse than we had, but after another year of the Lord Privy Seal we are right at the bottom of the list. I submit that this is an absolutely damning comment on the record of the previous Chancellor.
Secondly, let us take the factual test of the volume of exports. For, of course, the lamentable effect of the retreat from planning and the rise in living costs here, far exceeding what was going on elsewhere, lies not just in its injustice to the ordinary British public. Equally deplorable is the inevitable effect in raising wage costs here, relatively to other countries, and so seriously hampering the growth of our exports. We warned the Lord Privy Seal of that in his very first Budget. Each rise in living costs here, not due to a rise in world prices, and, therefore, not paralleled elsewhere, means a loss of exports to this country. That is what this Government refuse to understand.
Now let us compare the movement of exports in this country in the period before and after the present Cabinet embarked on the policy of deliberately raising living costs. I omit the rise in British exports in the first two years after the war, when we were in the exceptional position of recovering from the war. But from 1947 to 1951 there was a rise of 67 per cent. in volume in British exports—17 per cent. a year. Since 1951, there has been practically no further rise in the volume of British exports—at most perhaps 2½ per cent. or 3 per cent. a year now over four years.
If that does not convince hon. Gentlemen opposite, let us look at the dollar exports of the U.K., which are so crucial. Again, it is true that the rise has largely

stopped since 1951. Taking the value figures, which are all we have, and omitting the years 1949, 1950 and 1951 in order not to take devaluation into account, our dollar exports doubled between 1946 and 1948, a rise of 50 per cent. a year. From 1951 to 1955, on the same test, they rose only 20 per cent., or 5 per cent. a year. In fact, the rise both in United Kingdom exports as a whole, and in the total volume of our exports, came very nearly to an end in 1952.
Hon. Members—and I have in mind particularly the hon. Member for Oldham, East (Sir I. Horobin)—may very well ask, "If this is all true, how was it that the situation apparently eased in 1952 and 1953?" The answer is that the apparent easing, and the slower rise in living costs, were almost entirely due to the fall in import prices after 1951. The hon. Member for Oldham, East performed some gymnastics last night in trying to disprove this. He did so by entirely omitting from the story the year 1951. We are very glad to have heard from him that 1951 was an altogether exceptional year because of the Korean war boom. That once and for all disposes of the Tory fable that the troubles of that year were all due to a Socialist Government.

Sir Ian Horobin: The right hon. Member must not put words into my mouth. I said, and it is perfectly true, that in dealing with the terms of trade—that was all I was doing—1951 was entirely exceptional and that it would not be fair to deal with it. The right hon. Member must not say that I therefore deny that Socialism had anything to do with what happened in 1951.

Mr. Jay: What the hon. Member says this afternoon is not quite the same as he said last night.
Let us come to the economic argument. When he says that the terms of trade were no less favourable in 1948, 1949 and 1950 than they now are, I think that the hon. Member forgets that the United Kingdom had a balance of payments surplus in 1948, 1949 and 1950, and certainly did not have in 1955. The real point is this. Hon. Members opposite have constantly claimed that the easing of the situation immediately after 1951 was due to internal policy. But we say—and, of course, the figures entitle us to say—that the easing of the situation after 1951 was entirely


due to the fall in import prices in those years; that that tall masked the problem; that it should have been used to build up investment and gold reserves; but was, in fact, dissipated in these reckless and doctrinaire measures of decontrol and wasteful consumption.
I will give figures again. From the autumn of 1951 until the early months of 1954 British import prices fell by more than 15 per cent. and that equals more than £500 million a year on our balance of payments today—much more than the inflationary gap to which the hon. Member for Oldham, East referred. That measures the bonus which should have been added to our reserves, but which was, in fact, dissipated in these doctrinaire gambles. In 1954, import prices had only to rise by 2 per cent. by mid-summer—against the 40 per cent. which the Labour Government had to face in 1951—and the whole pack of cards came down and the gold began to leak away.
Even now—I do not think that the hon. Member for Oldham, East will disagree—the figures of import prices are only 7 per cent. above the low figures of early 1954; and that overstates the handicap we are now suffering, because export prices have risen. The terms of trade today are actually 11 per cent. more favourable to this country than they were in 1951. We can, in fact, still buy 11 per cent. more imports for the same volume of exports, yet the country is in the middle of a crisis.
We always warned the Lord Privy Seal that as soon as import prices began to rise, again his policy would collapse. But he always contemptuously ignored those warnings, and tried to give the impression that our good fortune was due to some magic of his own, or just to the fact that he was Chancellor for the moment. I accuse the Lord Privy Seal of misleading the country about the effect of the fall in import prices. I also accuse him in this sense of misleading it about the really dangerous state of our gold reserves. It was his duty to the House and country to explain—and he never has—that our gold reserves have been draining away over the last twenty months, at a time when those of almost every other country have been growing.
I asked him about that several times at Question Time, but he did his best to ignore or evade the issue. The hard

truth is that our gold reserves are now not merely lower than in 1945 or 1951, but, in relation to total sterling area trade, probably lower than they have ever been, though Continental countries have gained 5,000 million dollars' worth of gold, as Sir Oliver Franks pointed out, since 1951.
Sir Oliver Franks's comment on that is to say:
This is a state of affairs that we must surely all find deeply disquieting.
I think that the words "deeply disquieting," coming from a bank chairman to a Tory Chancellor, are very strong language—positively undiplomatic and almost unparliamentary. But they are a fair comment, all the same, on the situation at the present time. For the fact is that the crisis which we now face is the first purely United Kingdom crisis since the war. In the last two years the United States, very rightly and wisely, has been exporting gold, and every country except ourselves has gained its share.
To what exactly is this situation due? Let us look at it dispassionately. The fact is that we are in a crisis now—and we are all agreed about this—because the country is investing and exporting too little, and importing and consuming too much. We are exporting too little, because Government policy has forced up export costs and we are importing and consuming too much, because the Government have continually relaxed too soon. In the debate in November, 1951, I ventured to advise the then new Chancellor that the whole lesson of the previous six years was: "Do not relax too soon." But that is precisely what the Government have done. The worst and most foolish relaxation of all was, of course, to let in too many imports too early.
Last night, the hon. Baronet the Member for Harrow, West (Sir A. Braithwaite) very rightly and pointedly said that our balance of payments had been pushed "into the red" as a result of a flood of unnecessary manufactured imports. Of course, that is true; and that is the result of Conservative freedom. That was the worst relaxation. I will briefly mention a few others which, in my view, were unnecessary and unjustifiable.
First, the previous Chancellor, a short while ago, agreed to a rise from 50 per cent. to 75 per cent. in the proportion


of European Payments Union debts payable in gold, thus heavily increasing the gold drain on the sterling area. He need never have done that. Secondly, he allowed the free commodity markets to be opened again, thus undoubtedly increasing the dollar drain still further. Thirdly, he caused continual uncertainty, and wasted an astonishing amount of official time and money, in a ridiculous scheme of convertibility which had no chance of becoming real for years to come. Fourthly, he also terminated, in 1952, although I doubt whether hon. Members realise it, the system by which sterling area countries jointly agreed on a limit to their dollar imports. He simply left it to their discretion, which obviously must lead to higher dollar expenditure again. Is it any wonder that after all this the gold has been draining away?
What is perhaps equally serious, the whole intensity of the export drive which Sir Stafford Cripps built up, has been allowed to dwindle and die in these last few years. Today, for instance, we learn that in 1955, a year of world boom, British car exports fell by a quarter and that in this last month of January they were one-fifth lower than in January a year ago. It is tragic to see the extent to which markets for British exports in North America, which we might have had, have been lost in these last two years.
I do not wish to claim omniscience after a two-month visit to the United States and Canada; but I do say to the President of the Board of Trade that both British and American business men and officials there, in many different parts, told me that Britain was losing a potentially huge market simply for lack of effort, because it was so easy to sell at home. In 1955, in cars alone—and this is a tragic story which I regret as much as anyone else—while British car sales in the United States went down by 25 per cent. in a year of American boom, the Volkeswagen actually trebled their sales in the same year and now sell more than the whole British industry put together.

Mr. Cyril Osborne: Why?

Mr. Jay: The hon. Gentleman asks why. I asked that question of innumerable people throughout the United States.

They said the answer was that the British motor industry was not making the effort that it should, because it was so easy to sell in this country.

Mr. Osborne: indicated dissent.

Mr. Jay: I advise the hon. Gentleman not to deny that too readily, because I am simply telling him what I was told by a large number of independent people. On this point, which is really a serious matter for the country, I say to the President that, if he does not believe me, let him consult his own consular officers in any city in the United States or Canada.
Last night the hon. Member for Oldham, East, in what Lord Baldwin would have called a mood of appalling frankness, said that 1955 was a thoroughly discreditable year for the Conservative Government. But it was not in 1955 that the trouble started. It was in June of 1954. That was the highest level of the gold reserve. In July, the gold started to leak away. And what has the Lord Privy Seal been doing while the gold has been leaking away from June, 1954, onwards? Did he warn the people of the danger ahead, as Sir Stafford Cripps used to do, only to be attacked by hon. Members opposite for spreading despondency and alarm? In that respect I will say that the hon. Member for Louth (Mr. Osborne) was the honourable exception, which proved the dishonourable rule.
In October, 1954, when the gold had been leaking away for four months, the Lord Privy Seal went to the Tory Party Conference and advised his hearers to, "Invest in success." I do not know how many of them took him literally. But since that day the price of 3½ per cent. War Loan has fallen by 20 points. That may possibly account for some of the bad feeling within the Tory Party about both the Lord Privy Seal and the Prime Minister.
In November, 1954, when the gold outflow had gone on for five months, the Government abolished building licensing. What did they do next? What did the Lord Privy Seal do? Throughout the winter of 1954–55 he plastered the country with posters saying, "Conservative freedom works." Well, during every month that those posters were on the hoardings the gold reserve went down. In February, 1955, the right hon. Gentleman was forced to admit that "internal


demand was excessive"—not a very good advertisement for Conservative freedom—and he raised the Bank Rate—back to the magic fetish again.
Then, by April—and this is the pith of our indictment against him—when gold has been flowing out for ten months, so far from checking excessive spending, he "gave away"—his own words—another £150 million a year to those with the larger incomes, and so raised dividends by 22 per cent—his own figure—and stoked up spending throughout the economy. If it was a coincidence that there was a General Election just then, I do not know who is going to believe that. In my view, the April Budget of 1955 was the worst disservice to the true interests of this country committed by any British Minister for many years.
What did the Lord Privy Seal say? He said that his Budget would, liberate
…the human spirit to give of its best."—[OFFICIAL REPORT, 19th April, 1955; Vol. 540, c. 39.]
In fact, the only thing liberated was the gold reserve, which began to flow away faster than ever. He said on the wireless that his Budget would enable the country to "stretch, breathe and grow." The only thing which stretched and grew was the trade gap, which widened to £70 million a month from that time onwards. I ask anybody, was not the right hon. Gentleman misleading the country when he said in April:
…the situation has been brought under control as…is shown by the movement of the reserves…"?—[OFFICIAL REPORT. 19th April, 1955; Vol. 540, c. 40.]
Then, in October, 1955, when the gold had been leaking away for sixteen months, the Lord Privy Seal told us in this House that
…this Government has always taken action in time…"—[OFFICIAL REPORT, 26th October, 1955; Vol. 545, c. 227.]
He also said:
Actually, there has been a distinct improvement during the past month."—[OFFICIAL REPORT, 26th October, 1955; Vol. 545, c. 202.]
"Actually," £18 million worth of gold had been lost in that month, a mere 50 million dollars. Then he applied the brilliant remedy of forcing up the cost of living by one point through Purchase Tax; and the gold losses, strange to relate, went on month by month.
In December, the right hon. Gentleman himself went, too. But even that did not stop the gold drain. In the twentieth

month of the outflow we have the new Chancellor coming along, with his somnambulist air, and giving the country a dose of precisely the same poison which has brought it to its present state of crisis. On the basis of that record, and those quotations, I accuse the Lord Privy Seal, not merely of damaging the nation's economy, but of grossly misleading the public as well.
Finally, and briefly, what ought to be done in this situation, on the basis of these lessons from the past? I think that that is the note on which we should try to end this debate. We in the Labour Party believe that it is necessary, for the future greatness of this country, that a far-reaching, ambitious expansion of Britain's productive equipment should be carried out. We believe that an adequate gold reserve, many time its present size, must be built up, which will enable the counsels of this country to count for something in the world, and also enable us to do the investment in under-developed countries which we ought to be doing. That must mean a steady concentration, by deliberate policy, first and foremost on exports and investment; and that, in turn, must mean collective restraint on superfluous spending.
Unlike hon. Members opposite, we also believe that if spending is to be limited, that limitation should apply to those who have enough and to spare already. To secure that selective concentration on essentials, as a national policy, we are prepared to use any instruments, through the Budget, credit policy, or physical controls, which are both effective and fair. There, again, we differ from hon. Gentlemen opposite, who, apart from the hon. Member for Aberdeenshire, East (Sir R. Boothby), are still blinded and bemused by this strange mixture of superstition and greed which goes by the name of Toryism. But these proposals, put forward by the Government in a mood of muddle-headed desperation, we unreservedly condemn as utterly wrong-headed, contemptibly unfair, and miserably inadequate to the crisis which the country is facing.

4.20 p.m.

The Economic Secretary to the Treasury (Sir Edward Boyle): The right hon. Gentleman the Member for Battersea, North (Mr. Jay) devoted a considerable proportion of his time to talking about 1950 and 1951. I must say that I


have never felt that the events of 1951 were perhaps the happiest advertisement for what the right hon. Gentleman called the "purposive steering of the economy", but I will devote most of my time to talking about 1955 and 1956 in the spirit of "Let Us Face the Future" which, after all, was the right hon. Gentleman's Election address in 1945.
There is one comment which I would make at the start and one charge which I would completely rebut. The right hon. Gentleman seemed to be implying that my right hon. Friend the Lord Privy Seal had not been frank with the House at one stage last year about the state of the gold and dollar reserve. I assure the House that my right hon. Friend kept the House and the country fully informed of what was happening to the gold and dollar reserve all through last year. Though I have no desire to spend too much time on the past, I think that in this respect my right hon. Friend's record compares very favourably indeed with that of the right hon. Gentleman opposite in 1951.
As I reminded the House last October—and I will do so again now—in October, 1951, the former leader of the party opposite, Earl Attlee, gave a party political broadcast just before polling day in which he made not one single reference to the economic crisis then facing the country. The only public statement at that time on this subject was by the right hon. Gentleman the present Leader of the Opposition at the Mansion House, when he said that it would be:
…wrong to pretend that a serious problem does not exist for the sterling area.
As I reminded the House last October, it certainly did. When we got back to power, fortunately, in October, 1951, we discovered that the losses of gold and dollars in October alone amounted to 320 million dollars, and for the last quarter of that year 940 million dollars. I think that, on the whole, that was not perhaps the happiest advertisement for "purposive steering."
Yesterday afternoon, after the brilliant speech of my right hon. Friend the Chancellor—[HON. MEMBERS: "Oh."] Perhaps my next remark will be more generally acceptable. After the brilliant speech of the Chancellor, we had a speech from the right hon. Gentleman the Mem

ber for Huyton (Mr. H. Wilson) to which the whole House paid very close attention. Those of us who have been in the habit of attending these economic debates will all agree, wherever we sit in the House, that the right hon. Gentleman the Member for Huyton had a difficult task in following the right hon. Gentleman the Leader of the Opposition as "shadow Chancellor." I should like to say quite simply, and quite deliberately, that I have never heard the right hon. Gentleman the Member for Huyton make a better speech in this House. I am sure that the House did not grudge him any of the time he took.
We were also privileged yesterday to hear three excellent maiden speeches by the hon. Member for Preston, South (Mr. Green), the hon. Member for Carlisle (Dr. D. Johnson), and the hon. Member for Greenock (Dr. Mabon). When we hear maiden speeches here many of us think of the hon. or right hon. Member who represented that constituency before. I should like to say, as one who knew the late Mr. Hector McNeil only very slightly, that I am sure that all of us felt yesterday that he would have been delighted to know how admirably his successor acquitted himself in this House.
The right hon. Gentleman the Member for Huyton asked yesterday for what he called a "calm, sober appraisal" of the present economic situation. I will do my best to meet that request. There are two things which I should like to say by way of introduction. The first is this: no one realises more clearly than I do that to the ordinary man and woman in this country there are only two statistics that really matter. The first is their own personal income, whether it takes the form of a wage or a salary; and the second is the price level—especially the price of food, if some of what I shall say today seems a little remote from the economics of the ordinary household, I beg the House to believe that that certainly is not due to any indifference on my part to their problems.
The other point I wish to make at the outset is that people tend to think that "rising prices" and "inflation" mean exactly the same thing. That is not quite true. No doubt hon. Members will say a lot about inflation and about rising prices in this debate, but it is important to realise that rising prices are always the


result of an inflationary situation in which too much money is chasing too few goods. Therefore, if we want to secure more stable prices we must first take the necessary measures to see that there is a proper balance between our resources of manpower and materials and the claims made on them by the Government, business men and ordinary consumers. We will not get more stable prices until this balance has been achieved.
I was very glad to hear the right hon. Member for Huyton say yesterday—and I entirely agree with him—that there were a number of objectives which were absolutely common ground between the two sides of the House, however much we may disagree about some of the means of attaining them. The right hon. Gentleman began his speech by pledging the support of his party to the declared policy of the Government to maintain the exchange parity of the £ at 2·80 dollars.
I was very glad indeed to hear this. The Government have always put in the forefront of their economic objectives the maintenance of a strong sterling currency. Britain is a trading nation, and if our currency collapses our standard of living must fall sharply at the same time. Furthermore, a strong sterling currency is not simply just a British interest. We must remember the rest of the sterling area as well. It is my belief that a collapse of the sterling system would amount for this country to a major defeat in the cold war.
I do not think there is much dispute in the House on the basic cause of our present difficulties; namely, that our economy is overloaded and that the total demands that we are making on our resources of manpower and materials are greater than the volume of resources which we have available. A number of hon. Members, including my hon. Friend the Member for Oldham, East (Sir I. Horobin), asked yesterday for some figures about the present position. It will not be very long before hon. Members will have all the figures before them in the Economic Survey for 1956, but I ask for the indulgence of the House for a few minutes while I give some, as it were, provisional statistics about the present situation.
These must of necessity be provisional, and I promise that I will go over this

part of my speech, which is statistical, as fast as I reasonably can. In 1955, the volume of industrial production in this country rose by between 4½ and 5 per cent., compared with a rise of 7 per cent. in 1954. The fact that we had a considerable, but slightly reduced, rise in the volume of industrial production meant that we also had a slower rise in the gross domestic product, which rose by about 3½ per cent., or approximately £500 million, in 1955, compared with £600 million in 1954. I think that my hon. Friend the Member for Oldham, East quoted that figure.
However, while output rose less in 1955 than in 1954, domestic expenditure rose more, and the increase in total domestic expenditure that is to say, consumption, public authorities' expenditure, fixed investment and investment in stocks and work in progress—amounted to well over £600 million in 1955—at 1954 factor cost—compared with a figure of nearer £500 million in 1954.

Mr. Hugh Gaitskell: I think that the hon. Gentleman means increase.

Sir E. Boyle: Yes. The increase was £600 million in 1955 compared with an increase of nearer £500 million in 1954.
May I say a word about the increase in domestic expenditure. The rise in the volume of consumption by consumers' expenditure accounted for considerably more than half the rise in total domestic expenditure. I cannot give the House the exact figure, but the estimate in the Economist of 7th January, of an increase of £375 million in 1955, was probably not so far out. I must say—and I think I may get some agreement here—that I would commend this figure to that small and selected band of economists, including one of my own college, Christchurch, who still talk as if what we want is not more investment in this country but less and not less consumption but more. That view cannot be held honestly by any one who looks at the figures for last year.
The most striking feature of 1955 was the very striking increase in fixed investment other than in dwellings and in particular the investment by manufacturing industry. With all respect to the right hon. Gentleman the Member for Battersea, North, this was a very striking feature indeed of the economy in 1955.


Information provided by industry and published in the Board of Trade Journal for 4th February, 1956, showed a rise of 18 per cent. in investment by manufacturing industry in 1955.
I would say to the House that I think that anyone who studies these figures must feel that the case for any extension of public ownership in industry, beyond the basic industries, seems to become weaker each year. I have some sympathy with the right hon. Gentleman the Leader of the Opposition in fighting what I would call the old traditionist believers of the Ebbw Vale school.
Furthermore, the information which we have received also shows that towards the end of last year manufacturing industry was expecting a further increase of pretty well comparable size in 1956.

Mr. Gaitskell: Can the Economic Secretary give the absolute figures?

Sir E. Boyle: I cannot, and I think that it would be misleading for me to try to do so, but certain provisional figures have been published in the Financial Times. I will do what I can about that, but I do not think the official figures are yet available. Therefore, I think that it is important to realise that although measures have been taken to restrain investment, both by private industries and nationalised industries, there is no question at all of any fall in investment in 1956. The only question is whether we should not try to bring about some slowing down in the tempo of new investment in view of the overloading of our economy. I shall be referring to that at some length in the course of my remarks.
There is also reason to think that the increase in stocks and work in progress in the economy in 1955 was appreciably greater than in 1954, which indeed one would have expected after 1½. years of pretty rapid expansion in the economy. Whereas the imports were low and stocks rose very little in 1954 there was almost certainly considerable growth in manufacturing stocks in 1955.

Mr. Jay: Is not that a poor advertisement for the theory that the Bank Rate rise in February, 1955, was supposed to check stocking up of imported goods.

Sir E. Boyle: I shall have something to say about the monetary policy towards

the end of my speech. I say to the right hon. Gentleman that I think that a priori it would be unreasonable to expect monetary policy to have exactly the same effect on stocks in 1955, when we started the year with pretty low stocks, as in 1952 when we started the year with very high stocks. [HON. MEMBERS: "Oh."] That is a perfectly fair question, and I will say something more about it later in my remarks.
The right hon. Gentleman the Member for Battersea, North pointed out yesterday that one effect of the overloading of our economy was that the gold and dollar reserves fell during 1955 by 650 million dollars. I think that it is only fair to remind hon. and right hon. Members opposite that the reserves fell by 2,180 million dollars between mid-1951 and mid-1952—the crisis in the middle of which they left office.
May I make clear that we on these benches certainly feel no complacency at all at the low level at which our reserves now stand. The low level of the reserves is particularly serious when one remembers that the total transactions of the sterling area with the non-sterling world amounts to some £10,000 million a year. I hope that I am making clear what is the present position and that there is no question whatever of complacency on our part in determining to deal with it.
Quite apart from the low level of our gold and dollar reserves, Mere is also the need for the United Kingdom to earn a good surplus on current account. I agree with the right hon. Gentleman the Member for Huyton (Mr. H. Wilson) about the importance of the visible trade figures. I think that the right hon. Member for Battersea, North was not quite accurate about the trade gap in the period immediately following the April Budget last year.
In April, 1955, our gold and dollar reserves, showed a surplus—there was, indeed, a surplus for the second quarter—and the position was stabilised during May and June. It was only during July that we had a down turn again. There is no dispute between us that a bare surplus is just not good enough for the United Kingdom. We have to meet our obligations under the American and Canadian Loan Agreements. We have undertaken to find capital for Commonwealth development—and indeed we very


much want to be able to do this. We also need capital to develop our valuable assets outside the Commonwealth, especially oil.
May I also say to the House that it seems to me entirely fitting that the United Kingdom which, after all, did lead the world in the industrial revolution in the 19th Century, should be in a position to make some contribution to those countries which today are trying to gain greater control over their material environment. I was glad to have the opportunity last year not only of attending the Conference on the Colombo Plan at Singapore but of speaking at that Conference on this subject, when we promised further technical aid for a period of years. Before I come to the Government's Measures—

Sir I. Horobin: Would my right hon. Friend be good enough to confirm one of the two main things which I mentioned. Before he leaves the statistical part of his speech, would it be possible for him to confirm or correct the very important estimate which I ventured to give about inflationary pressure?

Sir E. Boyle: That estimate, for reasons which I shall be glad to explain to my hon. Friend in writing, I cannot give to him today. It is an almost impossible thing to work out, but I will write to my hon. Friend and explain the point.
Before I come to the Government's measures, there are two other points I should like to put to the House arising out of what the right hon. Member for Huyton said yesterday. The right hon. Gentleman referred to the question of import controls. I do not propose to add to what my right hon. Friend the Chancellor said yesterday when he explained to the House that he did not propose to reintroduce those controls. That is a point about which there is, frankly, a difference of opinion in this House. The important point surely is to realise that import controls cannot in any case be a substitute for internal measures when one has inflation due to excess of total demand.
If one were to reimpose import controls in order to give relief to our balance of payments, it would become more important and not less important to balance those controls by disinflationary measures at home. The right hon. Gentleman puzzled me in one respect. He seemed

to imply that we were spending a very great deal upon inessential manufactured goods from Europe and the dollar area. If the right hon. Gentleman looks at the figures he will see that that is not true. Last year, out of a total increase in our imports from the dollar area and the O.E.E.C. of 350 million dollars, only 32 million dollars, at most, come into the category mentioned by the right hon. Gentleman. It is important to realise that a very large proportion of our total extra imports last year were in what one might call basic raw materials.
It is a fact which we cannot get away from that when we have inflation due to an excess of total demand, it is precisely the inflationary demand at the margin which makes a full impact upon our import bill. I do not think that there is any dispute about that. It would be possible to deal with that problem, to some extent, if we went back to some pretty tough allocation schemes, but it is worth remembering that those schemes take a long time to get going. It is rather interesting to notice that in 1952, when we had a steel shortage, despite the introduction of steel allocation and a Bank Rate which almost certainly exerted a considerable effect upon stocks in that year, steel stocks rose fairly sharply. In any case, I do not think that there can be much doubt that the purely inessential element in our imports last year was a great deal smaller than many hon. Members have supposed.
Another reason why the speech of the right hon. Gentleman was disappointing was that he did not face up to the problems of what right hon. and hon. Members opposite would do to reduce the total demand; the right hon. Gentleman did, at times, come dangerously close to implying that we could get supply and demand back into balance if only we cut down on inessential building. I shall deal fully with the question of building control at a later stage in my speech, but the right hon. Member for Huyton himself quoted an estimate, made by the former Minister of Works, of £20 million in respect of the increase in all miscellaneous building in 1955. It is worth remembering that the effect upon total demand of the measures which my right hon. Friend the Chancellor is now introducing will, as he said yesterday, probably amount to hundreds of millions of pounds.

Mr. Donald Chapman: Is it not time that we stopped talking about this figure of £20 million, which is being bandied about as if it were a true estimate? We all know that, for a start, it refers only to new building. It has nothing to do with new conversions, expansions and renovations upon an enormous scale. Secondly, it is not true that the figure is terribly provisional, because the Government have abandoned all means of collecting any figures, as the Minister of Works told me in answer to a Question.

Sir E. Boyle: The right hon. Member for Huyton yesterday quoted it as if he thought it were a true estimate. I do not want to get involved in this matter now, but I think that the hon. Member for Northfield (Mr. Chapman) is including in his estimate a certain number of conversions which would certainly be excluded under any licensing scheme, because they would come below the limits. I would rather deal with the general issue of building controls later in my speech, when it comes in its proper place.

Mr. Frank Bowles: I do not pretend to be one of the band of economists to which the Economic Secretary belongs, but I should be glad if he could explain a point which puzzles me. We are told that we have too many imports and not enough exports. In that case, I should have thought that we would have a tremendous amount of excess goods in this country. Where does the excess pressure come in? What are we short of? The hon. Member said that it was a question of too much purchasing power pressing upon the amount of goods in the country. This may be clear to everybody else, but it is not clear to me.

Sir E. Boyle: I shall try to put it very simply. When we have a state of excess demand upon the economy, it always tends to work itself out by our taking in a volume of imports disproportionate to the volume of our exports. I cannot put the matter any more clearly or simply than that.
I now turn to that part of the Government's measures which affects investment. These measures have been severely criticised, both by the Leader of the Opposition last week-end and the hon. Member for Huyton yesterday. Those

criticisms were a little ungenerous, if only for the reason that the investment cuts which are being made are nothing like so great as those which were made by right hon. Members opposite when the Labour Party was in office in 1947 and 1949. In October, 1947, the late Sir Stafford Cripps announced investment cuts of £200 million, and in October, 1949—after devaluation—Mr. Attlee, as he then was, announced cuts of £150 million. I know that they were not all carried out, and that there was a great deal of what the right hon. Member for Ebbw Vale (Mr. Bevan) would call "manoeuvring." For all that. that was what was proposed, and I therefore think that the right hon. Gentleman is being a little ungenerous about the postponement of £50 million which is now being suggested.

Mr. Jay: Does not the hon. Gentleman think that we should be doing better 11 years after the war than we ere doing two years after it?

Sir E. Boyle: I think that we are doing better. There is a difference between the cuts which were made in 1947 and those being made today. As the Chancellor has said, not only have we not devalued the £; we have the absolutely firm intention of maintaining the £ at its existing value.
I want to make two points absolutely clear, because they are points to which I attach very great importance. I hope it is common ground that if our economy needs any change in the ratio of investment to consumption, it is a change in the direction of more investment. That is precisely why, both last autumn and today, we have seen to it that investment does not bear the whole brunt of the correction needed in order to bring supply and demand back into balance. I remember that the hon. Member for Sowerby (Mr. Houghton)—whom we miss this afternoon—used to complain because I was such a keen enthusiast for my right hon. Friend's autumn Budget. It was exactly for this reason that I so gladly upheld my right hon. Friend's budget. It is a matter in which the Government can legitimately take pride that it has not hesitated, once again, to introduce unpopular measures to curb consumption in order that investment should not be hit too hard.
A high rate of investment in productive industry is absolutely vital if we are to


compete in the markets of the world and also to maintain a rising standard of living at home.

Mr. Gaitskell: The Chancellor yesterday spoke of the total effect of these measures reducing demand by several hundred million pounds. Can the hon. Gentleman say how much of that will be saved on consumption and how much on investment?

Sir E. Boyle: I cannot give the right hon. Gentleman an estimate for that. He will realise that it is impossible to give any precise estimate. I think he will fully realise why I cannot give an exact answer to that question.
I come back to what I was saying about a rising standard of living at home. One point which cannot be repeated too often is that if people want more cars, for example, we must have more investment for increased capacity. In the long run, we must have more housing, more steel production, and so on. Nothing can be more important to our economy in the next twenty years, on the one hand, than keeping some sort of balance between increased consumption and increased investment and, on the other, between increased investment in our basic industries and increased investment at the finishing end of industry. That is a most important internal economic objective today, however much we may disagree as to the means of attaining it. [An HON. MEMBER: "That is planning."] We may disagree about the means whereby we 'attain our objectives and the relative weight to be attached to each method, but there are certain broad objectives—internal as well as external—upon which all hon. Members can readily agree.
My second point is that there will not be less investment in 1956 than there was in 1955. On the contrary, there is every prospect that, despite the measures which the Government are now taking, we shall have substantially more investment this year than last year. I dare say that some hon. Members will have seen the results of a new inquiry into investment intentions, published in the Board of Trade Journal for 4th February. This showed that in the late autumn, when the inquiry was made, private industry was planning an increase in the value of its total investment in fixed assets of 17 per cent. in 1956, following the increase estimated

at 18 per cent. in 1955. As I said earlier, all that the Government are trying to do is to bring about some reduction in the tempo of new investment so that our resources are not too greatly overstrained.
There are two points I would specially like to emphasise. The first is that we are making no reduction in productive investment in the coal industry. I do not believe one can overrate the enormous importance of coal production to our prosperity and to our national standard of living. I had the experience not many weeks ago of seeing the new steel plant at Margam and the new tinplate plant at Trostre. I apologise to any Welsh hon. Member if I have pronounced it wrongly. I do not think we can possibly see that great new modern tinplate plant without being impressed by the fact that the second Industrial Revolution is dominated by electronics. It is the tremendous growth in electronics and electrical development which constitutes the second Industrial Revolution that is going on today.
Anyone who sees, as I do, the weekly coal budget figures for the winter must be struck by what an enormous consumer of coal the electricity industry is. For that reason alone I would stress the tremendous importance of coal to our economy, and that it is hardly a paradox to say that the first great need of the atomic age is to produce more coal.
Before I leave the subject of investment, another point I would stress is that while my right hon. Friend is suspending investment allowances, except for expenditure on the construction of ships and on new scientific research assets, he is, of course, restoring the initial allowances. That is a very important decision. Experience shows that suspension of initial allowances can have a rather severe long-term effect on investment. The Leader of the Opposition suspended the initial allowances in 1951. He knows, because I have admitted it in this House before, what I think in retrospect about this decision. I once made something of a confession about this. I do not think he will deny that the suspension was exerting an effect on investment up to and including 1953. It had a considerable long-term effect. It is because we do not want to have an unduly long-term depressing effect on manufacturing investment that my right hon. Friend is not doing away with the initial allowances as well.
This will mean, in hard terms, that industrial building will now get a 10 per cent. initial allowance, plant and machinery, except for ships, will get 20 per cent., ships will continue to get a 20 per cent. investment allowance, scientific research assets will get a 20 per cent. allowance, mining works will get a 40 per cent. initial allowance, and agricultural buildings and works will get 10 annual allowances each of 10 per cent. This decision to restore initial allowances is of very great importance to our economy, not just immediately but over the years that lie ahead.

Mr. J. T. Price: Before the Economic Secretary leaves this section of his speech, may I ask him whether it is the intention of the Government to continue the initial allowances on motor cars which are being financed 30 per cent. in each year out of revenue? Is that making any contribution to our exports or balance of payments, or anything else? I mean motor cars on trade account.

Sir E. Boyle: I cannot add to what I have said, but I know this point, on which several hon. and right hon. Gentlemen have spoken to me from time to time. I will take note of what the hon. Gentleman says.
I wanted to say something about building control. This is an important matter about which a large number of hon. Members on both sides of the House mind a great deal. My right hon. Friend has said that he did not take a doctrinaire position over the question of physical controls. I can prove my own good faith in this matter by telling the House that I operate a physical control. One of the minor duties of my present office happens to be the allocation of tin plate. I do not think it works too badly.
Anyone who has studied carefully the question of building control, whatever his political position, would be forced to the view that it never could in practice work either as selectively or as scientifically as one might feel in theory it should. The right hon. Member for Huyton—I will try to be as fair as I can about this—said yesterday afternoon that building control enabled one to select between the important and the unimportant building projects. He went on to give an illustration. He said, "Let us take two pro

jects planned by two different companies, one firm exporting to the dollar area and wanting to expand, and the other company quite inessential, wanting an office building for football pools." Here I agree, of course, that there would be no difficulty. One project would obviously rank as essential and the other obviously as quite inessential.
But before I come to the question of miscellaneous building, perhaps I might say one word about investment in factories. In one way it seemed to me that the right hon. Gentleman yesterday was just a shade misleading. At one point in his speech he said that the big expansion had been in the motor trade. Then he went on to say that the other big expansion had been in the food, drink and tobacco trades. I have looked up the figures and I do not think the right hon. Gentleman was quite right. The figures for 1955—I will give those for 1956 in a moment—show that the food, drink and tobacco trades did not expand either in terms of buildings or of plant and machinery as fast as, for example, paper and printing. The expansion for paper is remarkable, but not surprising at a time of general expansion.
In 1956, the biggest expansion—apart from the motor trade—will not be in food, drink and tobacco, but in something quite different, namely iron and steel. There will also be considerable expansions for the aircraft industry and paper as well. Let me give the figures to the right hon. Gentleman. The food, drink and tobacco industries are expecting to spend an extra 6 per cent. on plant, machinery and vehicles during 1956, and an extra 41 per cent. on building work. The comparable figures for iron and steel are 38 per cent. and 63 per cent. which are very big increases on last year. I should have thought, whatever view we take on whether the iron and steel industry should be in the private or in the public sector, that very considerable increase for 1956 is something of which we all should thoroughly approve.
Let me come back to the question which is, I know, most in the minds of hon. Members—that of what one might call miscellaneous private building. It seemed to me that the right hon. Member for Huyton did not quite face up to the point that the civil servant operating the control—do not let us forget the


human element which is bound to come in when we are using physical controls—will not, as a rule, be faced with a choice between black and white but a choice between varying shades of grey. In this connection it is interesting to consider some of the types of miscellaneous building which increased during 1955.
The right hon. Gentleman mentioned petrol stations. The figures that I have been able to obtain are slightly different from his. My information is that £4 million of work was done on petrol stations in 1954 while licensing was still in force, and £7 million in 1955. Hon. Members may well feel that taking into account the value of the work licensed in 1954, a very considerable proportion of the £7 million would have been licensed even if building control had still remained in force. [An HON. MEMBER: "No."] I think there is very little doubt about it. Indeed, a number of hon. Members may legitimately feel that this sum of £7 million is not excessive when one takes into account the 75 per cent, increase in the sale of cars in the home market during the last two years and the fact so large and considerable a revenue from the sale of petrol reverts to the Exchequer.

Mr. Harold Wilson: The figure of 1,100 petrol stations was taken from the Economist of 14th January and has been subject to separate checking. I think it is equally likely to be right with the estimate given by the hon. Gentleman. He referred to the fact that there was some licensing of petrol stations in 1954, but we had been told by the Minister that licensing had broken down during that period because of a lack of demand, and that there was so little industrial investment going on in 1954 that all applications for licences were being automatically granted. The Minister of Works told us that. Is it not likely that there was licensing of relatively inessential things in 1954, but in 1955, when there was much greater freedom of investment, any sensible licensing system we have been saying "No "?

Sir E. Boyle: I assure the right hon. Gentleman that I got the figures from the most official sources that I could—and I am sorry that they do not agree with those given by the Economist. My own guess is that a very large proportion of the work actually done in 1955 had already been licensed in 1954. I do not

think that the right hon. Gentleman has allowed sufficiently for the time-lag there is in these things.
Let me take two other types of building which have been mentioned, and which have increased between 1954 and 1955. I see that shops have increased from £25 million in the last year of licensing to £30 million in 1955. I should have thought it often extremely difficult to decide whether shops came into the essential or less essential category, and certainly hon. Members will agree that the last thing we want to see is too many red brick streets with no shopping centres. Another type of building is church building. What about churches? There may be very legitimate differences of opinion as to whether churches in housing estates are essential or inessential. What about hotels? At first sight an hotel sounds something obviously inessential, but after all a good hotel in a city near to a centre of industry can very easily be a considerable dollar earner.
I would merely ask hon. Members not to rely too much on pleasant sounding words like "social controls" and "essential" and "inessential"—as though it were the easiest thing in the world to cut out a delicate sliver from the economy in time of difficulty—but to think in terms of brute, material facts and what it will mean to the civil servant trying to operate controls to the best of his ability,

Mr. H. Wilson: Will the hon. Gentleman say what shortcomings there are in the Civil Service which makes it impossible for civil servants to make what, I agree, are difficult decisions when bank managers have to make more difficult decisions every day?

Sir E. Boyle: I very much hope that I said nothing derogatory about civil servants in this respect, but I thought that yesterday the right hon. Gentleman was inclined to intimate to the House that usually there is a pretty sharp distinction as between black and white, whereas I think that in far the great majority of cases one is dealing with shades of grey.
Perhaps I may now deal briefly with the Government's measures to curb consumption and also with the Government's credit policy. With regard to consumption, the Government have found it necessary to take fresh measures to curb hire


purchase. That has, not attracted a great deal of attention in the debate, and I think that hon. Members in all parts of the House do realise that at a time when resources are tight it is reasonable to put an extra curb on consumption that is the result of borrowing. I would just say that, after all, the sharpest increase does include the range of goods where consumer durables such as television and washing machines are pressing on the same resources which we need for investment goods and for export.
About the bread subsidy, of which the right hon. Member for Battersea, North spoke, I would only repeat to the House what I said when speaking on housing subsidies in October last—the onus of proof is overwhelmingly on the side of those who believe that, after ten years of full employment and high earnings, there is still need to go on subsidising bread. That is particularly true at a time when we are all agreed that the total demand on our economy is excessive.
I have this to say about the Government's credit policy and of the monetary measures that they are taking. The right hon. Gentleman the Member for Battersea, North asked for an estimate of the cost of these measures. He must, if he kindly will, wait for the Budget, because I cannot give an estimate today. But he was not fair, I think, when he suggested that it was the wealthy section of the community who would gain from the credit measures. As he knows very well one inevitable effect of a higher—or the expectation of a higher—Bank Rate is to depress Stock Exchange securities. And I think that after the very eloquent Minority Report of the Royal Commission on Taxation we cannot regard the value of Stock Exchange securities as something unimportant in relation to consumption.
A number of hon. Members have spoken about the management of the floating debt. I do not want in any way to underrate the importance of that, but it is not true to say that an increase in Treasury Bills must mean more inflation. I think that some doctrinaire views on this have gained currency—and the Observer, I seem to remember, rather surprisingly fell for this one, too—because during the last half of last year there was an increase in Treasury bill circulation, yet, of course, bank advances did go

down. I entirely agree that the floating debt is very important from the point of view of monetary management, but one must not simplify these things too much. If I were to be asked about the effect of curbing bank advances, my own belief is—and I have seen this stated and believe it to be true—that while a reduction in bank advances may have had a considerably less effect on stocks than one might have expected from earlier years, the effect on consumption in 1955 was greater than has yet been realised.
I apologise for having detained the House for so long, but there is just one more thing I want to say. The right hon. Gentleman the Member for Huyton said that he looked on the proper management of our economic affairs as what he called a moral issue. I do not at all quarrel with him on that, although I must confess that the words "moral issue" have a slightly uncomfortable association with some Fridays when Private Members are discussing what other people should not be allowed to do on Sundays. That aside, I believe that there is no single objective which it is more important for us to pursue than that of what I would call orderly expansion without inflation. I think that this is a really vital question. We must have orderly expansion in our economy if we are to modernise our plant and equipment and maintain our competitive position in the markets of the world.
Not only that, I find it quite impossible to do anything but agree very strongly with economists like W. Arthur Lewis, who has pointed out that economic growth is always associated with a widening of the range of choice and that this is the best thing that can happen to a society. Having said that, I certainly do not in the least want in any way to underrate the social unfairness—sometimes, indeed, the misery—that is caused by inflation. I would say, quite simply, that there is nothing I can think of that I mind about more than the achievement of this objective of orderly expansion without inflation. We shall only attain it by constantly taking the right economic decisions in the short term. It is because I believe that my right hon. Friend's decisions are the right ones, to take at this time that I support them most heartily, and ask the House to reject the Amendment.

5.9 p.m.

Mr. Robert Woof: In rising to make my maiden speech which, in my part of the land, is tantamount to saying "gannin' o'er me dooks," I crave the indulgence of the House and ask it to extend to me its customary courtesy, as I want to avoid being controversial.
I have known an economic crisis every pay day since I was married, but my justification for intervening in this crucial debate is the knowledge I have acquired by reading the Second Report of the Select Committee on Estimates, dealing with the Development Areas. The people of my constituency take a very keen interest in this matter as Blaydon is part of the North-East Development Area. More roads lead to Blaydon than just "gannin' along the Scotswood Road." Many of the roads lead from the mining villages where a great anxiety for the welfare and well-being of the population is being created by the inevitability of the fact that pits are slowly dying a natural death.
This affects and involves not only the miners. The spectre of unemployment and the fear of being pushed about without any industrial purpose ranks high among the non-mining community. At one time, a man with a big family of healthy lads was recognised as an asset to the industry, but today the National Coal Board, in conjunction with the Durham Area Union of the National Union of Mineworkers, working in the best possible co-operation for future economic planning for the long-term and short-term life of the pits, is trying to keep redundancy down to the lowest possible limit.
I have had a disappointment this afternoon; I have had a lot in my time and I do not suppose this will be the last. I am sorry not to see the Minister of Fuel and Power in his place. I respect the Minister of Fuel and Power in his new capacity; I suppose it will be strange to him just as the House of Commons is strange to me. A man once told me that the best place for a student of psychology is a public house. When I go back to my constituency I will tell him that I have discovered another place.
Despite his absence, I feel obliged to comment on a reply which the Minister of Fuel and Power gave yesterday. He said that he was not aware that the National Coal Board was terminating the employment of men over sixty-five years

of age. It is a well-known and established fact. At my colliery—that which I have just left and where I used to try to boost the output—forty-one men received their Christmas boxes very early; on 30th November they received notices terminating their employment following a series of redundancy schemes. That also occurred at other collieries.
This has been going on for the last five years. I do not want to be misunderstood; indeed, I want to be very clearly understood on this issue. I am not complaining, nor am I asking the Minister or the House to intervene, because these schemes are drawn up as a mutual arrangement between the National Coal Board and the Durham Area Union. I want simply to emphasise that there is a policy of redundancy schemes in my area for the express purpose of making room for men under sixty-five years of age and enabling them to get their share of the available work during the limited life of the pit. It is not as easy as the Minister of Fuel and Power said yesterday. He said that any miner should quite easily be absorbed elsewhere. I am afraid the problem goes much deeper than that. It is just as important a human problem as it is a material problem. It raises a question of what we intend to do with the rest of family life, and it ought to be given serious consideration.
It is interesting to note in the Report to which I have referred that the Board of Trade laid down the principles that to become a Development Area, an area must first have a persistently high average rate of unemployment and, secondly, must have a high aggregate number of people unemployed in the district. Despite this principle and the limiting provision that there must be a special danger of unemployment, we in Durham have a very serious task to face. Alternative employment is very limited and we can most clearly see special danger of unemployment.
I respectfully ask the Minister of Fuel and Power to reconsider the answer which he gave yesterday to my right hon. Friend the Member for Easington (Mr. Shinwell) on the development of by-products in order to create a by-product industry to offset the danger of unemployment resulting from pits being worked out.
If we are to sustain our economic position and attain maximum production,


we must consider these things. If I follow the business of economics correctly, I understand from both sides of the House that it is the business of collecting facts, interpreting them, drawing inferences from them and discovering the relationship between cause and effect. If we understand it from that point of view, we must pay some regard to the gradual development of this problem, not only for ourselves but for the rising generation.

5.18 p.m.

Captain Charles Waterhouse: The House has listened with very great interest to the maiden speech of the hon. Member for Blaydon (Mr. Woof). When an hon. Member is first elected to the House, it is his duty to face the ordeal through which the hon. Member has just passed so successfully. The House always listens to make sure that the speech it hears indicates a real interest in the constituency which has honoured the Member by sending him here. It is perfectly obvious that the hon. Member knows about Durham and about Blaydon, and is a very worthy successor to the great man whose place he has taken.
Mr. William Whiteley was, I believe, feared by some in some parts of the House, but I know he was liked and respected by every Member of the House, and I believe that the new hon. Member for Blaydon may in due time go at least some way towards filling the great position which Mr. William Whiteley filled in our esteem.
This debate has been described as a balance of payments debate. The right hon. Member for Huyton (Mr. H. Wilson) put it on that basis in his speech yesterday, and many hon. Members on both sides of the House have followed that line. I want to approach it from that line. When one looks at the Trade and Navigation Report for the whole of last year one is struck by two things. The first, as has already been said, is the very large bulk of the increase of the gap between imports and exports and the second is the very large amount of that increase which came from the dollar countries and especially from the United States.
I want to point out one or two directions, some short-term and some long-term, in which I think action might have

been taken, or might be taken. The right hon. Member for Huyton mentioned the importation of maize, a matter which has been mentioned by other hon. Members. I want to add to the question of the importation of maize that of tobacco. Both in maize and tobacco there has been a very large increase in importation during the year under consideration—a very large increase in both cases from the United States of America, which is the last place from which we want to obtain those commodities. In Central Africa, from which I returned during the last few days, there are millions of acres well suited to the growing of excellent crops of both commodities.
It is not a short-term question. My right hon. Friend cannot call for maize and tobacco and get it this year, next year or the following year in the quantities we need. I am absolutely positive, however, that if he would look ahead and say to the new Federation, "We will buy your maize to the tune of something like 1 million tons"—that was our import last year—"over the next five or ten years at a price comparable to that which we have paid," which is about 48s. a bag delivered here, we should get a response from the Rhodesias which would be of great benefit to them and a very considerable saving in our balance of payments.
Another large increase was in paper and pulp, both of the raw material and the manufactured material. In both cases, also, a great deal of the increase came from the United States. There, again, it is up to the President of the Board of Trade or the Chancellor of the Exchequer, or both, to judge whether that increase was really essential. It is certainly nice to have it, and convenient to have it, but is it really essential today?
Another import which has been referred to in several parts of the House is one which is never popular with hon. Members opposite. That is coal. Last year, £73·9 million worth of coal was imported into this country. A few weeks ago the Minister of Fuel and Power said that about 1 million tons a month, £7 million worth, was now being imported. We have a net import for the twelve months of which I am speaking of about £10 million worth of coal. Every Christmas there is a period when the production of coal increases. In the few weeks before Christmas it normally increases by 10 or 12 per cent.
Are we quite sure that we could not get that production throughout the whole year? If we could, the whole problem facing the Chancellor of the Exchequer would be altered. We should save £130 million, £140 million or £150 million if we could get 20 million more tons of coal. I do not believe that that is impossible.
Naturally, I am not putting any politics into this question, but I strongly believe that we, the British public, in our capacity as owners, should say that the managements and men have no reason to be proud of what is happening today in our coalfields. We have every reason to say to ourselves that an improvement must be made and to be determined that an improvement shall be made, and that before too long, because there is no other way in which a comparatively small improvement could have so large and widespread a result.

Mr. P. Bartley: The right hon. and gallant Member is suggesting that we have nothing to be proud about in the management and workmen in the mining industry at the present time. Does he appreciate the fact that for some years miners have voluntarily worked an extra shift each week, which has resulted in an extra 12 million tons of coal and saved the country from at least 2 million unemployed?

Captain Waterhouse: I do not want to be controversial about this, but, as the hon. Member for Chester-le-Street (Mr. Bartley) has raised that point, I feel impelled to say that, so far as I know, no other industry asks to be paid for six days' work just because the workers work five days a week. That is one request of the miners which seems to put the whole industry into a different category from that of the rest of British industry. I say emphatically that if something could be done in the direction that I have indicated it would have a greater effect than any other single suggestion.
I wish to turn for a few moments to the question of the import of manufactures. It has been said that there has been a great inflow of luxury goods. I do not think that is really true, but there has been a very great increase in manufactured imports. The increase during the last year was £214 million, about 30 per cent., and a great deal was from the United States. Non-electrical machinery

from the United States increased by 34 per cent. and electrical machinery by 100 per cent. The adverse balance of trade between us and the United States has gone up from £81 million in 1953 to no less than £222 million in the last year.
What remedy there is for that I do not know. Figures available to us are not in sufficient detail to enable me, at least, to form an opinion which I would be prepared to offer to the House, but I suggest that the Chancellor and the President of the Board of Trade should bring this matter under urgent review. My right hon. Friends should have in mind the fact that a few months ago when the United States thought it was importing too many bicycles it increased the tariff on bicycles. If my right hon. Friends thought there were directions in which an increase in import duty would promote their purposes, they should not hesitate to use that weapon.
I was cheered, as I think were many people, when the Chancellor said with determination that he was going to look into the question of national expenditure and to cut where he could. I have heard the same remark made by other Chancellors of the Exchequer. I hope that my right hon. Friend may succeed; I feel there is room for success. Ever since the five years immediately following the war, when hon. and right hon. Members opposite were the Government, staffs have been swollen. I think that they must be very considerably cut. My right hon. Friend the Lord Privy Seal made cuts of between 30,000 and 40,000 and we are now told that there are to be further cuts of 10,000 to 15,000.
It is a very good thing that those cuts are possible, but they are only possible if we are prepared to give up some of the services. No one supposes that Government Departments are so expanded that cuts can be made in their staffs without our knowing that those people have gone. A few may be cut in that way, but it will make a difference to the services we get.
I have recently formed a little self-denying association, the members of which pledge themselves not to support any new expenditure which is not promoted by the Government. If any hon. Members like to join this exclusive little group, I shall be only too happy to take their names as soon as I sit down. At the moment, I am afraid, there is only


one member, but I hope that the membership may become rather larger before long.
I shall not go in detail into all the possible directions of economy, but I will mention just a few. This House of Commons does not give much of a lead to help a Chancellor of the Exchequer to achieve economies. During the whole eight or nine months of a Session we hardly ever settle ourselves down to discuss an Estimate in detail. Today, at the opening of business, Mr. Deputy-Speaker went into the Chair as Chairman of Ways and Means. This is a Supply day and we are discussing something of economic importance, but, in the main, the 24 Supply days which are set apart, as they should be, to discuss in detail the demands of Ministers upon the Exchequer, are taken up by the discussion of much wider though very important issues.
We really have no opportunity in the House of meticulously examining Estimates. It is true that a Committee of the House is set up for this purpose, and I have the honour of serving upon it, but our terms of reference are very limited and we are told that we must not consider policy. That makes a tremendous difference. If all questions of policy are cut out of our deliberations, it becomes a Herculean task to find directions in which any material economy is possible.
I cannot believe that the expenditure on the Foreign Office, which has expanded so much, is 100 per cent. justified. Everybody in it, no doubt, is doing good work and probably working hard, but I am not at all sure that all the new sections which have been set up in the last ten years are really worth while at the present juncture. I very much hope that in the comparatively short while that my right hon. Friend the Chancellor of the Exchequer was at the Foreign Office, he may have been able to see something which enables him to suggest lines of possible economy.
I know that in the vast organisation of the Ministry of Health, something has been done. I hope that the trend of making people pay a portion of the cost of the benefits that they receive may be continued. If they cannot pay, by all means let us give them a free service, but when they can pay I am certain that it is a healthy thing to allow them to pay,

so that the people who are using these services are themselves conscious of the value of economy and seek to bring about economy and not to encourage extravagance.
There is the vexed question of free meals in schools and meals which are subsidised. I understand that at present these meals are costing £32 million a year. We are told that meals are provided for 2¾ million children and that no child pays more than 9d. a meal, although the average cost is 1s. 9d, a meal. In his admirable speech yesterday, my right hon. Friend the Chancellor of the Exchequer, referring to bread, said that if anybody offered 2d. or 3d. to the average housewife and said, "Here is your subsidy for the week," she would probably be very much insulted. I believe that the ordinary woman whose children are getting the benefit of school meals would be rather insulted too if the education inspector came round with a few shillings each week and said, "Madam, here are the shillings for your children's dinner."
I do not believe that people realise that they are being subsidised. They do not realise that they are getting any benefit from it, and I am certain that the parents of the vast majority of the 2¾ million children could not only afford to pay, but would prefer to pay, were the matter put to them squarely. I hope, that my right hon. Friend will look into this matter, not to deprive any child of a meal when parents cannot afford to pay, but to insist that those who can afford it should pay the proper value of their children's mid-day meal.
From time to time, outside events apply a searchlight on inside arrangements. At the moment, an interesting searchlight is being thrown on to the B.B.C. I do not think that most of us realised that the B.B.C. has thirteen different permanent bands, employing 500 or 600 musicians. Internally, the B.B.C. is spending £22 million a year. That is all very nice, but my right hon. Friend may well consider whether this, too, is not a direction in which economy is possible. Those who know more about the B.B.C. than I do may know about the peculiar import of ready-made, packaged programmes from the United States. If there is a considerable expenditure of dollars in this direction, this too could be investigated by my right hon. Friend.
We are shortly to be considering the Bill to deal with monopolies and restrictive practices and business arrangements which restrict trade. I welcome the Measure that my right hon. Friend the President of the Board of Trade has brought in with that intent, especially its provision for judicial decisions, but I suggest that this form of restriction is not the most urgent or the most serious. The most urgent and most serious restriction today is not restriction by the employers, but restriction by the trade unions. [HON. MEMBERS: "Oh."] I am trying to deal with this objectively, although it is bound to be controversial. There is a peculiar thing which is known as "working to rule." Very few people on this side of the House understand how these rules came to be made—I do not know how many hon. Members opposite understand how they came about—but I do know the effect of working to rule, for production by people who are working to rule seems to be reduced to unprofitable dimensions.
Then, there are peculiar quarrels between unions. I have with me a news-cutting from the Press only last week, which states:
Unions clash over window frames. A dispute between two trade unions as to who should put in 420 metal window frames to a building at Westgate, Leeds.
The report describes the two unions—the woodworkers and the plumbers—who are having a boiling row about this. Already, work on this building has been held up for some time. Even if the dispute were settled now, it would mean that completion would be delayed for two months.
The Amalgamated Society of Woodworkers is the union which is having a row at Cammell Laird's shipyards as to who should do the drilling work in metal and wood sections of a ship under construction.
I am perfectly sure that this is a subject which must be tackled. If we are tackling restrictions and restrictive practices in one direction it is only proper that they should be tackled in other directions as well. I hope that my right hon. Friend will lose no time in getting into consultation with trade unions to find methods of resolving this highly unsatisfactory state of affairs of which these cases are examples.

Mr, Bernard Taylor: The right hon. and gallant Gentleman had some comments to make about the mining industry in relation to working to rule. Is he suggesting that the mining and quarry legislation enacted last year should be thrown to the winds?

Captain Waterhouse: I am not suggesting that any legislation should be thrown to the winds. I am suggesting that if there is a series of rules which have somehow grown up in completely different conditions and the result of working to them means getting no work done at all, those rules are wrong.
Another point, which I am afraid is controversial, is the amount of production lost through strikes. This last year four million working days have been lost by strikes. It is not only the loss of four million working days that is bad, but the dislocation which arises when those days are lost. When production is held up in one shop there is not only the loss in that shop but the delay and disorganisation which runs through the whole system and which are so very serious. There have been three major strikes—the Press strike, the railway strike and the dock strike—not one of which one might call an ordinary industrial strike. They were what I call prosperity strikes, strikes which would never have taken place if the people who struck were not so well off that they did not really mind whether they struck or not.
These three strikes were inter-union matters. They were not in support of a demand for better conditions or wages. They were all caused by disputes as to whether certain things should or should not be done and whether certain sums should or should not be paid to members of certain unions. That is a very grave misfortune from the point of view of the country. I agree that many of the leaders of these unions are as anxious to increase production as anyone in the country, but as long as we have production held up by this kind of thing it is difficult for my right hon. Friend the Chancellor of the Exchequer to present a balance sheet which gives us encouragement.

Mr. David Grenfell: Is the right hon. and gallant Gentleman aware that the figures which he has given represent the loss of only one-quarter of a shift per man in a year?

Captain Waterhouse: I am not exaggerating. I think that I am right in saying that strikes this year have caused the biggest loss in the last twenty years. Even if the strikes amount only to the figure given by the right hon. Gentleman the Member for Gower (Mr. Grenfell), the dislocation which they have unnecessarily caused is a very grave misfortune.
I believe that the House will support Her Majesty's Ministers in the proposals which they have put before us. I do not think that the country as a whole will agree with the attitude of the Opposition. We on this side of the House do not feel that we are in a state of crisis. We feel that the country is in difficulties, and we have confidence in the ability of Her Majesty's Ministers to resolve those difficulties.

5.45 p.m.

Miss Elaine Burton: The right hon. and gallant Member for Leicester, South-East (Captain Waterhouse) should know that no families of strikers regard strikes as being a sign of prosperity.
I was interested to note that earlier today the Economic Secretary to the Treasury admitted that the question of food and food prices was one of the major interests and problems of ordinary people today at a time of economic crisis. The hon. Gentleman added that he would not be able to devote much time to the subject. We all realise that he had to cover a great many aspects of the economic situation, but I hope that the Government will not slide out of dealing with food prices by saying nothing at all about them. I should have thought that in the present position the Government would have at least selected the Minister of Agriculture, Fisheries and Food as one of their speakers in the debate.
The Evening Standard for Friday, the day when the Chancellor of the Exchequer announced his new decisions, published a remark of his to the effect that "We must all join in the battle." This afternoon, at Question Time, Mr. Speaker told us that all Members were equal. I am quite sure that in the House, under Mr. Speaker, we are all equal, but I am afraid that in the country, under the present Government, and in the matter of the cost of living we may all be equal but some are more equal than others. I am afraid

that the people who are less equal and are suffering the most today are those who can least afford it.
The front page of Friday's Evening Standard displays the following:
Mr. Harold Macmillan, Chancellor of the Exchequr for eight weeks, got tough today. His new emergency plan to curb inflation will raise the price of bread by ld. a loaf, put milk up by ½d. a pint, and places new restrictions on hire-purchase…He told the House of Commons,' We must all join the battle against inflation'.
This is rather unequal joining.
Friday's Evening Standard also contained a leading article which was most incredible even for that newspaper. It praised the Chancellor for what he had done in the matter of the bread and milk subsidies. It said:
Too long have these been considered sacrosanct despite the fact that they contribute to the spending-spree by free money which should be spent on necessities to buy luxuries.
Ever since reading that leading article I have wracked my brains to think of old-age pensioners, workers with large families and small wages or people on small fixed incomes so often mentioned by the hon. Lady the Member for Tyne-mouth (Dame Irene Ward) who have been having a real spree on what they were saving by reason of the bread and milk subsidies.
I appreciate that the Chancellor will say that he is not responsible for the Evening Standard, but presumably he is responsible for what the Government say unless like the Minister of Education he is speaking for himself and not for the Government. The real trouble which the Tories will find out for themselves is that hon. and right hon. Members opposite have no conception of the psychological damage they have done to themselves in the minds of ordinary people. The Chancellor said yesterday:
Today, we are making a present of a few pennies on every loaf of bread, not only to Surtax payers…"—[OFFICIAL REPORT, 20th February, 1956; Vol. 549, c. 56.]
I really should have thought that the Chancellor would have given up trailing the bogy of the bread subsidy not being worth while because it goes to Surtax payers and to poor people alike. I should have thought that there was no hon. Member in the House or any person in the country who does not know that all politics apart the higher we go in the


income scale the less money we find is spent on bread. It just so happens that the people who are higher up in the income scale for one reason or another, eat very little bread. [Interruption.] If the hon. and gallant Member for Worthing (Brigadier Prior-Palmer) does not agree with that, he must be an exception.
The Chancellor then said:
I know very well that bread and milk are basic foods, but I do not believe that the rise in the price of bread and the very small increase in the price of milk will have any appreciable effect on their consumption.
I do not think it will have any effect on the consumption of bread, because people have to eat something, I quite agree, but I am not at all sure that the increased price of milk will not have an effect on the consumption of milk. We shall be able to see that after next July, when it comes into effect.
I think the Chancellor must have read the leader in the Evening Standard, because he went on to say that he did not think it would have any appreciable effect on consumption,
except, perhaps, to eliminate a small amount of waste which is apt to occur when anything in universal use is sold below its real cost"—[OFFICIAL, REPORT, 20th February, 1956; Vol. 549, c. 56.]
I can only conclude that the Chancellor, in company with the people opposite who agree with him, does not know any families in which it is a real effort to buy enough milk with which to keep the family fit. He considers that it is waste. That is why, today, I make no excuse for trying to deal with one subject only, because I believe quite honestly, and a good many of my hon. Friends believe with me, that this question of food prices is at the very heart and core of this problem of inflation.
We have had some very pressing suggestions from the party opposite to the trade unions that they should curb wage claims, that they should be patriotic and help to stabilise the cost of living. I should have thought that hon. Members opposite would have realised that nothing would have so great an effect on the pressure of wage claims as a real fall in the cost of living, and that that was perfectly obvious. For millions of people, not only the lowly-paid wage earners, the old-age pensioners and those living on fixed incomes, but the people with large

families, the cost of food is the cost of living, and I do not think any hon. Member would disagree with that. I do not know whether the hon. and gallant Member for Worthing wishes to disagree with it, but, if so, I will give way to him.

Brigadier O. L. Prior-Palmer: I was merely wondering whether the hon. Lady would mention what proportion of the weekly income is spent on tobacco and other things apart from food.

Miss Burton: I still do not think that large families of small children live on tobacco, but perhaps they are different in Worthing.
Nothing that this Government has done in the past or since the General Election, and nothing in the Chancellor's proposals now before us, indicates any firm action or any action at all about this problem of the cost of living. I have here a very short cutting from the News Chronicle of 16th December last year, from which it seems that this Government never learn. I agree that if we had a General Election next week, the Government would have a very long time in which to learn, but, unfortunately, we are not likely to have one. [An HON. MEMBER: "The hon. Lady said that last year."] The hon. Gentleman will have to admit that I am right when I sit down this time, because I shall have demonstrated it in my argument. This cutting from the News Chronicle carries the byline, "By The Industrial Correspondent, Margaret Stewart", and at the top is the heading, "Cost of Living Jumps Again." The article says:
Since the beginning of the year—
that is, 1955—
the index has gone up by eight points—the highest rise in any year since the Korean War sent world prices soaring.
The writer states what does not seem to have sunk into the minds of hon. Members opposite—that these increases will strengthen the bargaining hand of trade union leaders in asking for more pay, and the article continues:
The three biggest wage claims outstanding—involving engineers, miners and railwaymen—are all based in part on the rising cost of living.

Mr. Robson Brown: Would not the hon. Lady agree that, politics apart, the basic and main element in the cost of living is, in fact, wages?

Miss Burton: I am coming to that. If the hon. Gentleman can wait until the end of my speech, he will see that I have tried to deal with it.
I should have thought that if the trades unions were to be continually aggravated by rises in the cost of living, it is not unreasonable that they would want to protect the living standards of their members. From December, 1954, to November, 1955, retail food prices in the United Kingdom rose by over 8 per cent. This was not so in many other countries of Western Europe, but was the result of deliberate policies followed by this Government—policies which were designed to let the cost of living rise and rise in such a way that those most in need felt it worst, because the Government allowed the worst of the price rises to occur on food. The latest period for which figures are available, which is this period from December, 1954, to November, 1955, show that, in Europe, the rises in retail food costs were about 3 per cent. in France and 1 per cent. in Belgium, while there was no change in Western Germany, the Netherlands or Switzerland.
I know that the Government may say that we have to import a good deal of our food, and I think that we probably import about half of it. I think hon. Members would agree that our food prices must be partly dependent on import prices. In November, 1955, the prices of our food imports were nearly 5 per cent. lower than in December, 1954. I wonder whether the Government can explain to the country why it is that prices in the shops have risen by over 8 per cent., while the cost of imported food has fallen by 5 per cent.

Mr. Archer Baldwin: Can the hon. Lady give the prices of food in those Continental countries that she has just mentioned? If not, may I tell her that the prices of all articles of food there are higher than they are in this country?

Miss Burton: The hon. Gentleman misses the point. I said that the rise in the cost of living here was greater than anywhere else, and that statement was perfectly true.
Writing in the journal of the National Union of General and Municipal Workers for this month, the Secretary, Mr. Tom Williamson, had this to say, and it is very useful for my purpose:

Between December, 1954, and November, 1955, retail food prices in the United Kingdom rose by well over 8 per cent. That the continued rise in food costs has been having its Impact on consumption is indicated by the fact that consumers' expenditure on food, re-valued on average 1948 prices, was nearly 2 per cent. lower than in the first three quarters of 1955 than in the last three quarters of 1954.
Mr. Williamson went on to deal with the question of profits, and had this to say:
This, however, has not prevented the food industry from increasing its profits. According to the Financial Times analysis of company trading results, 229 companies in this industry which issued accounts during 1955 had gross trading profits of £233,632,000, compared with £211,025,000 in the previous accounting year—a rise of £22½ million or more than 10 per cent. Shareholders in these firms had their dividend payments raised by nearly 15 per cent.
I have stated repeatedly in this House that I believe that one of the major causes of the rise in retail food prices is the cost of distribution. In many cases today this distribution system is antiquated. It is out-dated. It has far too many people taking far too much money at different stages. In fact, many people are taking money for doing nothing. Even the hon. Gentleman the Member for Leominster (Mr. Baldwin) will agree that we have reached the stage where the money received by the primary producer bears little or no relation to the price charged to the shopper in the shops for many goods.
I have here a copy of the Coventry Evening Telegraph for 16th February, carrying the story of a meeting in the heart of the Prime Minister's constituency in Leamington. It would be interesting to know the reaction of the Prime Minister to that meeting because it was one of the National Farmers' Union consumer-producer committees. The article is headed, "Price of Potatoes is Doubled between Farm and Consumer." I know that some hon. Gentlemen may think it a far cry from the economic situation of the country to potatoes, but it is not a far cry to the housewife who goes out every day to buy potatoes. At that meeting the farmers deplored the fact that the price of potatoes was being doubled between the farm and the housewife's basket. This was said by the National Farmers' Union and the N.F.U. is certainly not Labour.
At that meeting the question was asked as to who was profiteering. The farmers


were not prepared to commit themselves, but one added that the greengrocers did not often make fortunes. The housewives blamed the middlemen in the chain of handlers from grower to consumer. The article went on to report the statement that the tremendous difference between prices charged by growers and the retail costs, sometimes amounting to four times as much, could not be accounted for. I think that will be accepted by the House.
We have repeatedly asked Questions in this House. Only on 12th December last I asked the Minister of Food whether he would inquire into the profits which were being made by the middlemen. The right hon. Gentleman said he did not think that was necessary. He did not think that anybody was getting exorbitant profits. It is easy to say that, if one does not want to find out. One can easily say one has no evidence. The Minister added that he thought the best results were obtained by free competition, such as we were having at present.
I can only say that the free competition we have been having has resulted in a rise of 8 per cent. in the shops over a twelve-month period, while import prices have fallen by 5 per cent. The Minister of Food also said that he was not against having an inquiry if one were necessary. He cited the committee which had been set up on horticulture. It seems to me that the terms of reference of that committee are very wide, and that we shall get little or no reference to profits when that committee reports.
We returned to the attack on 16th February—last week. I asked the Minister of Food about distribution and he was still not prepared to do anything about it. The right hon. Gentleman was not even prepared to look into the costs of certain types of food. I am convinced that if we had an inquiry into the distribution of certain types of food we would find that considerable savings should be made, but I can understand that the party opposite has no desire for such an inquiry to be held.

Mr. Osborne: May I ask the hon. Lady to consider the following facts? I am the chairman of two wholesale grocery companies. I can show her the balance sheets of those companies for the past twenty years, which reveal that they have not made a 2 per cent. profit on an

average over that period, which includes the last few years. If she will inquire of the people in the wholesale grocery trade, she will find that the gross profits are between 7½ per cent. to 8 per cent. and that we pay some of the worst wages in the country because the profit margins are so small. If she only knew the real facts of this case she would not talk so much about it.

Miss Burton: That is splendid. I can only recommend the hon. Gentleman to go to Covent Garden, as I did, and find out for himself.
The hon. Gentleman the Member for Twickenham (Mr. Gresham Cooke) has been showing great interest in distribution and Government inquiries, and I told him that I should be raising the matter this evening. I hoped that the hon. Gentleman would be here, but he has had to leave the Chamber. It has been obvious to us on this side of the House that the primary object of the hon. Member for Twickenham is to try to have a "dig" at the trade unions, to try to accuse them of restrictive practices.
Covent Garden has been mentioned. We on this side of the House would welcome an inquiry into the methods of distribution there. Covent Garden is antiquated. As everybody knows, it was set up a long time ago and, although now a market of national importance, it has not the facilities for handling perishable produce at the necessary speed.
It is not so much a matter of one person making a lot of profit. In Covent Garden the produce is handled on a commission basis. It is a case of far too many people taking a little at different steps in the wholesaling stage. If we had an inquiry, beginning with the producer and going right through to the shopper, I think we would form a very different picture. There is no doubt that the housewife does not get the benefit of fluctuating prices. She is penalised when prices go up, but she does not get the advantage when prices fall.
I am also sorry that the President of the Board of Trade is not here at the moment. The right hon. Gentleman said that he does not contemplate any action this Session on the Weights and Measures Acts. Those Acts do not apply to wholesalers' sales. If they inquired, the Government would find that in the case of fruit and vegetables, which affect the


shoppers to a great extent, a considerable amount of expense would be spared to the shopper if the small shopkeeper had some redress when he gets short weight.
Here are a few examples: 5 lb. of soil in 56 lb. of potatoes; 7 lb. of soil in one hundredweight of carrots; a 40 lb. box of apples in which the apples weigh 35½ lb. I do not know what redress hon. Gentlemen opposite would suggest that a small shopkeeper or retailer has in those cases. If they suggest that he should take the goods back to the wholesaler, I can only say that they are even more ignorant than the hon. Member for Louth (Mr. Osborne) thought I was, and that is saying a lot.
Now I come to bacon. Is anyone along the line from producer to retailer taking a profit which is unnecessarily high on the already high price of this food? What does the producer get? What does the curing factory take? What is the share of both the wholesaler and of the retailer? I want to ask the President of the Board of Trade what effect he reckons the proposed import duty of 10 per cent. on Danish bacon will have on prices of bacon in future.
The last example I want to take is school milk. I know that this is not being raised in price, but all of us in this House were disturbed not long ago by a Report from the Public Accounts Committee on this matter. This milk costs the Exchequer about £10 million a year in England and Wales alone. Owing to the attitude of the milk trade, this milk, in the main, is paid for at full price by the schools, although hospitals enjoy the benefits of cheaper contracts.
The Committee on Public Accounts said that the position in May, 1955, was that only about 25 per cent. of the milk delivered to schools was bought at a discount below the maximum retail price. That represented a saving of £90,000 per annum. The Committee went on to refer to widespread and concerted opposition from the trade against competitive tendering.
The Committee also said that in some cases tenderers who had offered a discount had been denied supplies by the wholesalers. If local retailers feel that they can offer a discount on these bulk orders to schools, I want to know on what grounds wholesalers, whose returns are

obviously not affected, should object. They may have a case, but there is no doubt that an inquiry into distributive costings of milk would show what it was. I have taken those three examples to show that an inquiry into distributive costs would be of great benefit to the shopper and would bring down the price of food.
It is very important also to say for the record that between 1945 and 1951 under the Labour Government retail prices went up by 34 per cent., or about one-third, but import prices, which we cannot control, went up by 120 per cent., or more than three times as fast as the price level at home. The fact that we were able to keep the rise in prices here at a slower rate than the rise in world prices is a reflection of our policy at that time.
The present Leader of the Opposition, in December, 1954, said:
Since 1951, import prices have fallen by 16 per cent., retail prices at home have risen by 10 per cent., and food prices by 20 per cent."—[OFFICIAL REPORT, 7th December, 1954; Vol. 535, c. 794.]
To bring it up to date, two-thirds of the rise in the cost of living since 1951 has been due to dearer food. Food prices have gone up by more than 6s. in the £. Everyone in the country knows that higher rents will soon still further send up the cost of living. To date, food prices have by far led the field.
Yesterday, my right hon. Friend the Member for Huyton (Mr. H. Wilson) said that however the Opposition treated the Chancellor of the Exchequer it would not treat him as the present Government, when in Opposition, treated Sir Stafford Cripps. I have often had it said to me that there is no honesty in politics. I hope that that is not true, but I must say that during the last 18 months I have been disillusioned by the attitude of the party opposite. Last February, we had the restrictions on hire purchase, because the country was spending too much. In April, we had the electioneering Budget which gave away money and which helped to win the Election for the Government. We then had the autumn Budget and this last week, just after the announcement of the three by-election results, we had the present proposals.
I have mentioned Sir Stafford Cripps. I was not in the House in 1949, but I well remember the dismay I felt when Sir Stafford Cripps felt that he had to


tell the country that he was putting a ceiling on food subsidies. That meant an increase of 4d. a week on the food bill of every adult. He produced his Budget at the earliest possible moment, which happened to be two days before the L.C.C. elections. We nearly lost control of the L.C.C., after fifteen years in power. But, at least, that action was honest. The present Government have set a new standard of morality in these matters.

Mr. John Howard: Will the hon. Lady carry her mind back to 1952, when the present Government reduced the cheese ration just before the 1952 L.C.C. election and thus helped us to lose that election?

Miss Burton: This is something a little more important than cheese. The party opposite is numerically stronger than we and, presumably, our Amendment will not be carried; but I have not the slightest doubt that in the hearts of the people the Government have lost, and lost badly.

Mr. Robson Brown: Will the hon. Lady answer my query about the rise in wages and the cost of living?

Miss Burton: I have assumed that wages would be considered in any inquiry into the cost of distribution, because there could not be any such inquiry without wages being included.

6.15 p.m.

Mr. Godfrey Lagden: I should like to claim the indulgence of the House on the occasion of my maiden speech and say that I am greatly honoured to be able to speak in such an important debate. This subject is important to the constituents whom I represent. In Hornchurch, there is possibly as large a cross-section of people in differing occupations as anywhere in the country. We have a large proportion of black-coated workers, a very large number of people who work in factories and a very large number who are employed in the motor industry, at the great Ford motor works, at Dagenham.
Today, I was fortunate enough to attend a luncheon and preview given by the Ford Motor Company at Harringay Arena, when it introduced its three new models, and I recommend to the House the confidence shown in the Government

by that action of introducing three new models to the country at this time. If it will satisfy the hon. Lady for Coventry, South (Miss Burton), I should say that I found myself seated between. Mr. Wolfson, of whom she may have heard, and a trade union secretary, and I can assure her that they both ate bread.
We hear a lot in this House and in the quarters in which we move about such things as the stability of the £ and the dollar gap and other phrases which have a great meaning for us. It will be generally admitted, however, that many of our constituents, hard-working people, do not exactly understand the meaning of these serious terms. They are far more interested in full employment and unemployment, and I believe that the proposals of the Chancellor now will make sure that they continue with full employment and do not return to unemployment,
It might be timely to exercise our minds for a few moments about the way unemployment starts. It may be a very long time—it probably is—since any hon. Member actually received a weekly pay packet, but I put it to you, Mr. Speaker, that it is a very terrible moment for anybody opening a weekly pay packet to find inside a small notice which says:
Thank you for the way in which you have served this company. After next Friday we shall not require your services.
Today, and in the years immediately past, a man receiving such a notice might say to his wife, "I am very sorry, my dear, but I have got the sack"—let us use words we understand. His wife might say, "Well, it does not matter. There are so many jobs that if you set out on Monday you will easily get another."
But if we are not extremely careful that man, when he sets out on Monday, will find many thousands of men on the tramp, doing the same thing—looking for a job. That would be something which a working-class wife would understand only too well. She would realise that that was the start of something she had seen before, and something she feared. There is nothing like unemployment to degrade a man.
For that reason, I believe that all hon. Members of this House should take every possible step to see that working men and women are not put in the position of being frightened to go to the little shop on the corner because they owe a


little on last week's bill and cannot pay it. We must protect working-class women from that and also try to prevent their husbands from having to come home week after week and face the question from their wives, "Have you got a job yet?", and, feeling unwanted, having to say, "No, my dear, I have not." If we allow party feeling to enter into this matter, we shall fail to protect the men and women of this country.
If we are to save the country from dire unemployment, we must make sure that the trade unionists elect responsible people to high offices, and, having elected them, back them one hundred per cent. On the other hand, it is extremely necessary that the employers should gain the confidence of their employees by actions and not words. I suggest that if a General Election were to take place within a few days, every hon. Member would find time to stump up and down the country trying to win the Election battle. I feel that it is our duty, as Members of Parliament, to stump up and down the country to try to win the battle against inflation. If we do not win that battle, it will be no use hon. Members on either side of the House saying. "We have scored a point; we have defeated the other side." The people who will be defeated are the people we all wish to serve; the people who will suffer are our constituents.
Tonight, I intend to vote for the Government, because I wish to make sure that my constituents, and the constituents of other hon. Members, will be safeguarded from unemployment. I appeal to the Leader of the Opposition to find it in his heart to advise the hon. Members who form his party to be sure that when they go to the country, making legitimate political points, they do not do anything which will wreck the ship of State or the well-being of the British people.

6.23 p.m.

Mr. J. Idwal Jones: It falls to my lot to follow the hon. Member for Hornchurch (Mr. Lagden), who has just made his maiden speech. I warmly congratulate him on an excellent contribution to this important debate. Apart from his closing observations, the hon. Member might have been speaking from these benches, especially when he referred 'to the dread of unemployment which

exists among the working-class people. I congratulate the hon. Member most sincerely, and I am sure that we shall look forward to hearing him again. I am only an "apprentice" myself, and I know that when one is called on to speak in this House it is not always easy, because the level of debate is so high.
Debates on the economic situation have followed each other with marked regularity of late and we have heard the usual arguments and clichés. It is quite possible that I, also, will fall into the same sin of repeating the usual arguments and even the usual clichés. But the most disturbing fact is that upon each successive debate we find that the economic situation itself has deteriorated. With the exception of the artificial brilliance of the spring Budget, the position in the last fifteen months has been grim indeed.
Throughout the Summer Recess we were expecting to be recalled because of the economic situation. We were not actually recalled, but immediately we resumed our duties we had the autumn Budget. We saw the axe being wielded and the splinters and chips flying about. We thought that we should have a rest from economic problems until next April. Yet we ended our debates on the housing subsidies only last Wednesday and we certainly thought that we might get a rest from this question. On Thursday afternoon, however, we learned that the Bank Rate had gone up and we were told to prepare for hard and heavy tidings on Friday.
In other words, if I may change the metaphor, the patient is not recovering and has to undergo a further operation. While the Government persist in their grand old-fashioned style the patient is languishing and may possibly die on the operation table. Is it not possible to convince the Government that they may be wrong? I am persuaded to use the words of a great parliamentarian, Oliver Cromwell, who said, "I beseech you think it possible you may be mistaken."
Are we not today witnessing something similar to what we experienced thirty years ago? Then we heard financiers, theorists, bankers, and the Chancellor of the Exchequer arguing for the Gold Standard and its retention because they thought that was an essential theory to be strictly adhered to in order to preserve the solvency of this country. The working man of that time felt in his bones—


although he did not understand the Gold Standard—that there was something radically wrong with a theory which put him on the street to take his place in the queue at the employment exchange. At that time there was a too rigid adherence to an economic theory, and I am afraid that we are seeing something similar today.
I am thinking, in particular, of the banking policy and of the credit squeeze policy which is now being adopted. We find today that the Government are relying, I believe unduly, on the Bank Rate and on the credit squeeze. That is orthodox and classical, and yet we feel that it is not working. It is like breathing on a thermometer and concluding, when we find that a higher temperature has been registered, that the cold spell is over. I am afraid that along these lines we have no real solution to our problems.
I always enjoy the speeches of the Economic Secretary to the Treasury, and I enjoyed the one he made this afternoon as much as ever. These were the words which he used in July during the discussion on the economic situation. He said:
I think that it would be helpful if, for a few minutes, I spoke about the work of the monetary instrument during these last months because I think that the orthodox monetary weapons have worked more effectively than some people realise.
Later, he said:
I should like to make it plain that the Bank Rate has been effective pretty well throughout."—[OFFICIAL REPORT, 26th July, 1955; Vol. 544, c. 1121–2.]
That is all very well and very complacent, had not the then Chancellor on the previous day made this observation:
The monetary Measures taken in February have been by their nature slow in their effect on the home demand."—[OFFICIAL REPORT, 25th July, 1955; Vol. 544, c. 824]
It is all very well to talk about orthodox and classical methods and to claim one moment that they are effective and then at another to say that they are slow. The fact is that we are not living in orthodox or classical times. We are not living today in the prim and proper days of the nineteenth century. We are living in very unorthodox days. The world does not believe any more in classical ways but has gone romancing. Consequently, it is this orthodox and classical policy, which is relied on so much by the Government, that I want to call into question.
I know that the orthodox and classical theory of monetary policy is in line with the Conservative way of thinking. It has two aspects. First, it includes the doubtful policy of relying on a change in the Bank Rate—in this case, raising the Bank Rate—which, obviously, must increase the financial burden of the Government and must, of course, be to the advantage of the lenders, whatever hon. Members opposite may say. At the same time, this policy of the Government increases the burden on all households. Even bread and milk have at last gone up in price. Last May, we were led to believe that we were on the verge of becoming a land flowing with milk and honey. Today, we find an increase in the price of bread and milk.
The fact is that the classical theory and the orthodox policy is not working. It is not justifying itself in the field of practice, despite the eloquence with which it was defended by the Economic Secretary to the Treasury. Last Friday, in the Manchester Guardian, the City Editor wrote:
It is a commonplace that a high Bank Rate alone does not stop inflation…But on the continent, as in London, it is universally said that this decision will do no good by itself. It is typical of this general attitude that even the London discount market, the heart of the money machine, does not believe in the classical policy. Sir Eric Gore-Browne, Chairman of Alexanders Discount Company, stated yesterday that in his view monetary restraints, for example the use of the Bank Rate and the credit squeeze, could not, either alone or in combination, stop the spiral of wages and prices.
In the Manchester Guardian yesterday there was something along the same lines. It said:
Somehow, the two sides of the economy, finance and industry, have to be persuaded to move together.
And then there were these cryptic words:
Mr. Macmillan, and Mr. Butler before him, have shattered confidence on the financial side, but we have yet to see the effect on the plans of industry.
That is why I have not too much faith in the monetary policy known as the classical or orthodox policy.
I want to draw attention to the other side of the question, namely, to production. I speak of this because it is of fundamental importance. The policy of the Government means restriction on production because there is restriction on capital investment. Rather than face the


problem squarely and devise schemes of priorities so that there might be concentrated effort on schemes of vital importance, and less concentrated effort on schemes of lesser importance, the Government have handed to the banks the unpopular task of doing the squeezing. It is indiscriminate, to say the least. It is anarchic. It is the finest example we have of a Government shirking their responsibility.
The Government should be in the best position to judge, but they have voluntarily abrogated to the banks their authority and responsibility. Anyone can make an observation like that, but we can consult HANSARD, which shows that in reply to a Question to the Chancellor at the end of July last the Economic Secretary to the Treasury said:
In his letter of 25th July asking for a reduction in the total of bank advances, my right hon. Friend said that it was for the banks to decide what steps they must take in order to make this policy effective. I have no doubt that in doing so they will give full weight to the importance of agricultural production."—[OFFICIAL REPORT, 27th July, 1955; Vol. 544, c. 163–4.]
The banks are not in a position, and cannot be, to know what is best for agricultural production. They should not have been asked to decide the requirements of this basic industry. The nation needs the maximum agricultural production, and neither banks nor Government should stand in the way. Why are all the Government's proposals necessary? It is because we are in an inflationary position. But the Chancellor's policy is negative. All his measures are designed to prevent something or other. They are meant to check here and to cut down there.
But you cannot build on a negative: You cannot build by weakening the foundations. The only sound method to adopt is to attack inflation at its weakest point. Now, if inflation means "too much money chasing too few goods," then the only sound method is to concentrate on the production of goods. That is just what the Chancellor is not doing. He concentrates on the monetary side of the problem, and contracts production capacity by restricting capital investment. How can a country become richer by becoming poorer? How can inflation be cured by reducing production, on the one hand, and raising the cost

of living, on the other? The whole policy is as fantastic as it is crazy.
Important as the monetary instrument is—and no one will doubt that it is important—we should start at the production end with the production of the right kind of goods, of the right quantity, the right quality and the right standard—

Mr. Osborne: At the right price.

Mr. Jones: At the right price—rather than restrict capital investment as we are doing at present. The workman should have at his disposal the finest type of capital equipment we can provide.
Consequently, the £ should follow production and not production the £. The fact is that the nation is under a great and crushing burden. We are trying to do too much. In the first place, Britain is trying to retain her position as the financial centre of the sterling area, and we hope that she will retain that position, but it is a big burden. In addition, we have the great burden of £1,500 million for defence—a crushing burden in itself. We have also the further burden of thousands of young men—the potential labour force being conscripted to the Army, and we have also to find £100 million in order to pay for our troops in Germany.
Those are the crushing burdens of the present day and the Government should abandon their doctrinaire attitude and be magnanimous enough to see the error of their ways. We have a fine Army of experienced labour second to none in the whole world, and we have not given them the capital equipment worthy of their experience and skill. Never has it been more necessary than now to plan our resources. The Government can put taxes on dustbins and brushes, they can raise the price of milk and bread, they can remove subsidies on housing, they can even make hire purchase illegal, but even then what the Government will gather with the rake will be insignificant compared with what they are doing today—throwing away with a shovel the grand possibilities which planning of the economic order suggests at the present time.

6.42 p.m.

Sir Robert Boothby: There are very few occasions, Mr. Speaker, on which I wish I was a Front Bencher on either side; but tonight


is one of them because I should love to have one of those 60-minute speaking "sprees" in which every hon. and right hon. Member on both Front Benches now feels it is his national duty to indulge, with the sole and honourable exception of the right hon. Gentleman the Member for Battersea, North (Mr. Jay), by whom this debate was opened.
I should love to go on for 60 minutes—I think 70. to be precise. However, Mr. Speaker, instead of a speaking "spree" you have indicated to me a 15-minute "nip." In the circumstances, I must ask for the indulgence of the House, as any attempt at interruption will be ignored. I thought that the best thing that I could do was to divide my speech, like Gaul, into three parts, in the somewhat desperate but not impossible hope that each part will occupy five minutes; in which case all will be well.
I intend to devote the first five minutes to a visit which I have paid just recently to the U.S.A. I think that it might be of some interest to the House. I discovered, rather to my surprise, that over there a planned economy was being superbly run. I was not altogether expecting that. I want to tell the House, first of all, about the team. The team consists of an Economic General Staff, for which the Chancellor of the Exchequer and I pleaded in vain for about twenty years in this House between the wars, headed by a very remarkable man, Mr. Arthur Burns; a special department of the Treasury under the Under-Secretary, Mr. Randolph Burgess; and the Federal Reserve Board, of which the Chairman is Mr. William McChesney Martin, a very young and brilliant man whose reappointment was recently confirmed by Congress.
The methods are, first, the management of money and control of credit, through the discount rate and open market operations, far superior to those which exist in this country. I admit that they are greatly assisted by the fact that the reserves of the commercial banks in the U.S.A., expressed as a ratio of their deposit liabilities, are fixed by law. I was interested to see that Professor Erhard, the Economic Minister in the Government of Federal Germany, is now introducing legislation to do that very same thing.
I am not at all sure that it might not be worth very careful consideration on the

part of the Chancellor whether the minimum reserve requirements of our own joint-stock banks should not also be fixed. It would have one very desirable result. The discount rate would operate over a much wider field; and it would no longer be necessary to use the bank managers of this country as fiscal agents of the Treasury, which they dislike very much and which, if I may say so to my friends of the Tory Party, constitutes the most intimate and unpleasant form of interference with private life that it is possible to imagine.
They are also assisted by the practice of the United States Treasury of distributing its cash balances and short term borrowings very widely through the commercial banking community. We do not do that. We have our Treasury bills, to which reference has already been made; and I will not go into that.
The second method is what they call "built-in stabilisers." That is a good American expression. It means frequent variations in taxation and expenditure on social security, public works and farm support prices. The third—and this rather surprised me—is a control over the use of credit in security speculation, and for housing loans insured or guaranteed by the Federal Government which now amount to over two-fifths of the total home mortgage debt.
The fourth, I am sorry to have to say, is a control over imports which, though, far less necessary there than here, is extremely effective. If they want to stop something coming in which they do not like coming in, they stop it, and they stop it quickly, by using the tariff weapon. Having got it they do not have to worry. I will give the example of bicycles, of watches—and there was also the smaller occasion of cheeses. They have a far more effective control over imports than we have in this country, and they require it very much less.
Finally—and this I think brings me to the end of the first part of my speech by about 50 seconds—they have something which we have not got on any comparable scale, and that is the most wonderful statistical service the world has ever seen. I suppose that Mr. Burns himself is one of the greatest living statisticians. After years of research, although he is not so very old, he has reduced about 600 indicators of economic trends in the national economy to 21 "key factors." The fact


remains that they have statistical information in the Treasury and the Federal Reserve Board of the United States incomparably superior to anything we have even thought of in this country. That is why we are so behind the times, and they are so up to date.
Mr. Martin, the Chairman of the Federal Reserve Board, gave evidence before Senator Fulbright's Banking and Economic Committee while I was in Washington. He thinks that things will be fairly good for at least another twelve months, although slightly less surging than last year. But they will be pretty good, and still on the up. To the question, "What is your policy going to be for the next six, months?" he replied, "Lean against the wind; timing is of the essence." He can do it. Who can do it in this country? I believe that we should look into this.
I have always had a theory that we have never won the Walker Cup because we have never sent our team over to study the methods of the United States, with the result that our golfers are amateurs and theirs are professionals. I think that much the same applies to the Treasury and the Bank of England. The Chancellor should send a deputation from the Treasury and the Bank of England to study the methods of the Treasury and the Federal Reserve Board of the United States. I am firmly convinced—and I have worked quite hard at this—that we are amateurs and they are professionals in these matters.
Certainly, their results have been impressive. They stopped the impending recession of 1953–54 to the consternation, alarm and surprise of every economist in this country who had predicted it with varying degrees of certainty from right to left—from Clark to Balogh.
They checked successfully the impending inflationary boom of 1955–56. They have kept the national economy upon a level keel, and prices amazingly steady; and have produced an economic climate of opinion which has resulted in a productivity without parallel elsewhere or in history.
I am now going to read two brief passages from recent reports, which will bring me to the end of the first part of my speech. They are from the reports of the Economic Advisory Committee, and they

give a clue to the philosophy which underlies this very remarkable planned economy. The first, two or three years ago, said:
We believe as strongly in economic progress through free and competitive enterprise as our fathers did, but we have come to believe that the Federal Government has the capacity to moderate economic fluctuations.
In the most recent report, the Committee says:
The best service that the Government can render to our economy, besides helping to maintain stability and ensuring a floor of protection for the population, is to create an environment in which men are eager to make new jobs. to acquire new tools of production, to improve or scrap old ones, to design new products and develop new markets, to increase efficiency all round, and thus be able and willing to pay higher wages and provide better working conditions.
There is a great deal in that. I could not help comparing it with the very interesting speech made by the hon. Member for Northfield (Mr. Chapman) yesterday, when he was saying with such horror that conditions might necessitate a slight transfer of labour from the motor car industry to another industry. I see deadly danger to this country if we come to the view that we must preserve the existing pattern of industry at all costs, and maintain all our existing jobs.
I now come to the second part of my remarks. Having seen how it should be done, I am more than ever convinced that the economic policy of successive Governments since the war has been, well, let me content myself by saying, "Jolly bad," all the way through, and by the lot. We got off to a bad start with the American Loan, which was used as a drug. I never wanted to have it on the terms we got. Then we had Daltonian buoyancy accompanied by cheap money, after which the right hon. Gentleman ran us into convertibility and there was an almighty crash and that was that. This was followed by Crippsian austerity and controls; and the result of that was devaluation, which was not so hot. Finally, we have had the Lord Privy Seal's "dash to freedom," which has landed us in our present position.
All I can say about it is that four major crises within a decade are nothing to make either party very proud. There is not much to go on slamming each other about. The record of both parties in this matter is pretty lousy. I do not believe that the problem that confronts us


today will be solved by the dogmas either of Socialism or of laissez-faire, but only by radical revisions of thought and policy, and by courage. I am delighted—I say this with all sincerity—to see the new Chancellor of the Exchequer in office. He has already shown much greater courage than any of his predecessors.
Now let us have one look at causes. What are the four main causes of our present trouble? The greatest of them all has been excessive public expenditure, ever since the war. I am going to say something with which hon. Members opposite will not disagree. I am oppressed by the thought of the wasted expenditure on defence. I am not blaming anybody for a moment. In this sphere, science has been working too fast for humanity. We have been scrambling along desperately and trying to catch up, but we have never caught up. It is nobody's fault.
Obviously, the Royal Air Force is the most important of the three Services, but think of the amount of money that has been spent, for example, on Fighter Command since the war. What have we got to show for it now? This has been an expenditure, not of £10 million or £20 million like the bread or milk subsidies, but of hundreds of millions of pounds, absolutely wasted. I sometimes lie awake at night and think of the money that has been wasted and is still being wasted on defence, with the best intentions. Sooner or later the Prime Minister and the Chancellor of the Exchequer will have to make up their minds what sort of defence forces we want in three years' time, and say to the Minister of Defence, "That is what we want. Scrap everything else."
On my second point I may not carry all hon. Members with me. A system of progressive taxation on earned incomes which, in the words of Professor Lionel Robbins,
amounts to a discrimination against enterprise and ability such as has never before existed for any long time in any large-scale civilised community,
is the greatest hamper to our economic advance. No man in this country can save out of earnings, even if he is right at the top of his profession. He can only save out of successful speculation or property deals. That is all wrong.
Thirdly, there is the point to which Lord Beveridge drew attention in The

Times, the day before yesterday. He referred to the actions of associations of employers and workers which are equally responsible for determining competitively the money rates of wages and the prices which inevitably follow, by bidding up for ever higher wages and scarce labour, in conditions of full employment. Employers have tried to bribe labour away from one industry to another, and the trade unions have been tempted—I do not altogether blame them—to take advantage of full employment to force up wages to heights which the national economy cannot stand.
Finally. I come to excessive imports. I have to be very careful about this. The speech of my hon. Friend the Member for Harrow, West (Sir A. Braithwaite) yesterday was not only interesting, but really frightening. Any hon. Member who has not read it in HANSARD should do so. He will find it very well worth while. My hon. Friend broke down and analysed the figures of our imports for 1955. They are not funny.
The most significant were for coal, steel and feeding stuffs. There is no use in adding fuel to the fire, but I might make one final plea to the miners that if they cannot dig the coal we need they might allow other people to come in and help us to get it. We want it desperately. As for steel, we have ourselves very largely to blame. If we had laid down a strip mill four years ago, as well as the one in South Wales, we should not be in the mess we are in today. It is a great pity.
We spent £55 million last year on imported feeding stuffs mainly from dollar countries, while the acreage under oats in Scotland was going steadily down. The price of oats, largely due to the importation of these feeding stuffs, is down to 53s. a quarter at this moment, with a guaranteed price of 72s. to be met by the taxpayers later on. That is absolute madness. I cannot get away from the fact that it is more than two years since Professor Austin Robinson, in an article which I have never seen contradicted, estimated that we should have to adjust our national economy to four-fifths of our pre-war imports. Since then our imports have reached vertiginous heights. And, in addition, we have paid 916 million dollars since 1951 for interest and principal on the American and Canadian loans, which in my opinion—so far as the American Loan goes—we should never have taken on the terms we did.
I simply want to say this. Mr. Martin, in the evidence he gave to Senator Fulbright's committee said:
I think we're kidding ourselves if we think that there'll never be any recessionary tendencies again.
Sooner or later, there will be a recessionary tendency in the United States. I do not think for perhaps a couple of years or so—but, as I have said before to the House, what is a ripple in the water over there becomes a pretty big roller by the time it crosses the Atlantic.
To the Chancellor I say, "I do not think that you can go on dishing out dollars indefinitely to the commodity markets. We are not earning the dollars at the moment, and one day you will go to the cupboard and find it bare." This country cannot be left permanently defenceless with the reserves we now possess. To do that would be quite irresponsible. I am not asking the Chancellor to rush through emergency legislation to control imports, but, as long-term policy, he must erect some kind of defences which can be relied upon in another emergency.
Sooner or later, we shall all have to cut our dollar imports to the level of our dollar earnings—and that goes for every country in Europe. It can be done only by protection, by discrimination and by increased production in this country and in the sterling area—production, above all, of coal, steel and feedingstuffs.
At least, I am on the record. On 29th July, 1952 I said to the House:
…Our production of coal"—
this is, in 1952:
food and steel during the last five years has not been anything like adequate to sustain the standard of life which the people of this country have enjoyed…
I went on:
I believe that no system which denies all defence against the instabilities of an economic system so dynamic"—
as that of the United States
and so out of proportion to our own can indefinitely survive…There is no machinery now to deal with an emergency arising from any sharp change in the balance of payments in the sterling area…the age of laissez-faire and multilateralism has gone. The age of mass production and large economic units is here…".—[OFFICIAL REPORT, 29th July, 1952; Vol. 504, c. 1345–50.]
Again, on 4th February, 1954, in the debate on the economic conference at Sydney, I said that the Chancellor

…may easily get himself into a position where he cannot carry out an expansionist economic policy…These proposals, in so far as they can be called proposals…mean less not more discrimination…It also means a looser rather than a tighter control over imports. I confess that I find this a frightening prospect…If we are now contemplating the free import of food into this country, without any control or protection at all…it is going to cost the taxpayers of this country so much money that the mind boggles at the thought. I do not think that we can do it."—[OFFICIAL REPORT, 4th February, 1954; Vol. 583, c. 628–31.]
I now want to come to the third and smallest part of my speech. We are all asking ourselves tonight, I think, one question: is this the beginning of the policy of the Chancellor of the Exchequer or the end? Is this all he has to say, or is it just the start? I say and I believe that he has done, and done bravely, what could be done and what had to be done at this moment; but his actions are—and I agree with what the hon. Gentleman opposite has said—in themselves they are negative actions. In the long run, as I said to the House in February, 1953:
To increase exports by repressing industrial development at home is a policy of desperation."—[OFFICIAL REPORT, 3rd February, 1953; Vol. 510, c. 1738.]
I am delighted to see my right hon. Friend the Chancellor sitting there, because I want to give him this one little warning. His present policies would have been warmly endorsed by my revered uncle, the late Lord Cunliffe. He reigned at the Bank of England, before Keynes had revolutionised the economics of the twentieth century, but he would have warmly endorsed this action. So, I am afraid, would Mr. Montagu Norman; and I think that the late Lord Snowden would have applauded it loudly. That does not necessarily mean that my right hon. Friend is wrong—I think he is right—but it is a warning signal, because what Lord Cunliffe, and Mr. Montagu Norman and Lord Snowden did was to do what my right hon. Friend has done, and stop there.
That is no go; and I do not think for a moment that that is what he intends to do. Positive actions have still to come, and I beg of him to consider what direct incentives he can give to produce what we most need, to save—personal savings, without which we can never have any industrial development—and to export. For these, I think, we must await the Budget.
We live in an expanding world and are losing at the moment our share of an expanding trade. In the circumstances a policy of expansion is essential and a long-term policy of restriction would be suicidal. There was a thing—I think the Chancellor may remember it—called the Strasbourg Plan. So far as trade policy is concerned it was designed to harness the industrial resources of Western Europe to the raw material resources of our associated overseas territories and by providing assured markets for both to expand the production and the trade of the whole.
That plan was dismissed—I am bound to say contemptuously dismissed—by the Lord Privy Seal. I minded a bit because I had had a hand in the drafting of it and I think that my right hon. Friend might at least have given it a more civil farewell before kicking it down the chute. But I know well why it was dismissed. It was dismissed because it involved planned international investment, preferential arrangements and therefore discrimination in trade. I say to the Chancellor of the Exchequer that in one form or another he will have to come back to it.
Finally I want to say that if in the name of laissez-faire and non-discrimination the Chancellor refuses to give to the national economy the positive strategic direction which the Americans are so brilliantly giving to theirs we cannot hope to survive in the modern world. With his construe-five record I have no fear but that he will give us that positive direction and that we shall then be saved.

7.8 p.m.

Mr. Frederick Mulley: The hon. Member for Aberdeenshire East (Sir R. Boothby) is a very difficult Member to follow on any occasion and I think the House will agree that he has surpassed himself this evening. None of us grudges him the few extra minutes which he took beyond his self-imposed time limit. I should like to take up a great number of points which he made, but, since the Chancellor is here, I will simply direct the right hon. Gentleman's attention to the list of names which the hon. Member for Aberdeenshire, East quoted as a warning when he said that Cunliffe, Norman and Snowden would have approved the policies which the Chancellor has recently presented to the House.
The hon. Member for Aberdeenshire, East did the House a service in giving us an interesting, if only a brief, account of the way in which the American economy is regulated. I wish we could spend more time on that. I also congratulate the hon. Member on having found something new to contribute to the debate at such a late hour in our proceedings.
Had we, on this side of the House, advocated the fixed ratios of the banks, we should have been criticised as interfering with the freedom of the economy. The hon. Member also made an important point about the provision of statistics. I can recall voices from the benches opposite trying to close down the statistical and information services which we have. I must ask the hon. Member to carry on the education within the ranks of the party opposite which he has begun so well tonight.
There is no real difference of opinion in the House on the facts of the situation; we all agree about the nature of the problem. I thought the Chancellor was using a cheap gibe yesterday when he referred to the fact that we had used his words in our Amendment, and I ask him to reflect that he is a member of a Government which over the last five years has been responsible for this situation arising. Indeed, I would say that he owes the present office which he occupies to a very different analysis of our economic situation presented by himself and his colleagues to the country last May.
I do not think this is any subject for laughter or cheap jests, and I regret that in his speech yesterday he saw fit to exercise the undoubted talent for variety which he has displayed so often before in the House. I hope that the President of the Board of Trade who has similar talents, will not exercise them tonight, but will try, as I believe the Chancellor tried in the early part of his speech, to get down to the real problem which we face.

The Chancellor of the Exchequer (Mr. Harold Macmillan): I made only two jokes. I think that that is a very good ration.

Mr. Mulley: I was not complaining about the jokes. I was complaining about the cheer-leading attitude which he adopted, as if his job were to raise the spirits of the party opposite. Perhaps he feels that that is his job. I felt that he did not do justice to the subject.
We all agree on the terrible cost of unemployment. Indeed, when we heard an admirable maiden speech a little earlier from the benches opposite, I reflected that a revolution had occurred in that such a speech could be made as a non-controversial maiden speech and, even more, that it could be made by a member of the Conservative Party. Members of the Labour Party were shouted down less than twenty years ago for making such speeches. We on this side of the House naturally hope that the Government will do their utmost to avoid any social hardships arising from further doses of unemployment.
Sincerity and earnestness of purpose may not be enough, however. The pony opposite has adopted our policy in the maintenance of full employment, and I hope the Chancellor will not mind if I borrow a phrase from his speech yesterday and say that imitation is the sincerest form of flattery. I congratulate the Conservative Party, as I have done outside the House, on adopting our policy in these matters, but what it does not recognise is that unless it adopts the weapons necessary to implement that policy it may fail, no matter how sincerely it seeks to avoid failure.
I believe that the measures announced so far by the Chancellor are ineffective to meet the problem. I also believe that as a consequence of his measures the burdens are unequally shared between the various classes of the community. I do not want to spend a great deal of time on them, but I should like, briefly, to comment on some of his proposals. First, I was shocked at the decision to cut the bread and milk subsidies. In fact, when the matter was canvassed earlier in the week in conservations, I was under the impression that the friend with whom I discussed it was suggesting an increase in the subsidy, because I believe that as a contribution to a solution of our problems a reduction in the price of bread and milk would do far more good than the classical analysis leading to a cut in consumption by a reduction in the subsidies.
The Chancellor is going about economy in the way in which the Minister of Education went about economy in teachers' salaries, and I can think of no way to express foolishness more emphatically. The Minister of Education endeavoured to cut 1 per cent. off the

cost of teachers' superannuation, and the likely outcome is that they will get 10 per vent. or 15 per cent. extra in salary a year earlier than they would have done. I do not complain, but I think that, similarly, this £38 million will be more than offset by the psychological pressure which there must be for increased wage demands.
The cut in the milk subsidy does not come into operation until 1st July. Would it not have been better to put 2d. on the standard rate of Income Tax, which is all it amounts to, in order to bring about a corresponding reduction in consumption? I believe that we shall not test the effect of these measures and the Chancellor's sincerity until we have the Budget. Unless he is prepared to use the weapons of taxation to reinforce his demands for sacrifice by the wealthier sections—the sacrifice which he and his predecessor have already imposed on the poorer sections by these measures and by Purchase Tax—he can hardly expect the trade unions and we on this side of the House to co-operate as he would wish.
A great deal has been said about the Bank Rate and rates of interest, and I do not want to repeat what has been said often before, but, clearly, the point about all these monetary mechanisms is that of business expectations. If a quick profit is to be made by borrowing money at 10 to 12 per cent., as has been happening recently in the City, and perhaps is still happening, people will borrow at that figure. On the other hand, if they cannot make a quick profit by borrowing at 2 per cent., that 2 per cent. will not necessarily have an inflationary or expansionist influence. Expectations are the key, and I want to say more about that in a moment.
The debate has shown more than anything the amount of nonsense which has been talked from the benches opposite about the single simple word "control" It has had an emotional content. As the hon. Member for Aberdeenshire, East said, the refusal of credit by a bank manager is more frustrating and more personally humiliating than the rejection by a civil servant of an application for a building licence or some other permit. The Chancellor and his predecessor have glorified the word "squeeze" as though there were something Conservative and progressive about it, whereas control is used as a nasty Socialist word. How can we possibly distinguish in effect between


a man being turned down by his local bank manager and a man being turned down by part of a Government plan in an application for steel or building allocations?
The same criticism can be directed to the investment restrictions which the Chancellor has imposed. When the investment allowance was being discussed in the House, many of us from this side of the House put down Amendment after Amendment pleading with the present Lord Privy Seal, then the Chancellor, to be selective in his application of these allowances. The decision now to cut investment allowances, together with the application of the higher rates of interest, the Bank Rate and the credit squeeze, means that the only criterion in investment today is that of quick profits. The less essential investment can very often continue, whereas important development to build up production in the future, and certainly investment in the basic industries—very often investment which would have brought export results—is stopped.
What a contrast with the Government's attitude towards investment in the nationalised, public sector. The Chancellor himself talked about priorities here. If it is right to have priorities in the public sector about each investment, as that for coal production—which has rightly been given priority—why is not the same principle applicable to the private sector, when, as we know, the private sector represents 80 per cent. of the economy?
The attitude of the Chancellor and of the party opposite to the general crisis in our economic affairs which we have to face is rather as if in the middle of the war someone had said, "You cannot have special measures or special directives to build planes at one moment or tanks at another; we must have a general policy that will get more and more armaments built." The only way in which to get the best from our economy during a difficult situation—always in our lifetime we shall have the problem of balance of payments and never find life easy—is to adapt the planning mechanism, which was so successful in the war, to the general structure of our economic system in peace.
We have to plan from the centre. The Chancellor has to take back the weapon of the Budget, which has been almost renounced by himself and his predecessor. The present operation of the "old pals act" by the bank manager has clearly

got to go. That is how the economy has been run for the past twelve months. I hope the Chancellor will give some indication when he prepares his Budget that we have to have a Budget surplus—a big Budget surplus—if, for whatever reason, there is not a sufficient volume of private saving coming forward to match the necessary investment which, for a great number of reasons, we must undertake.
In addition, I believe that we have to use controls in order to be selective in the investment we encourage. We have also to face this fundamental problem because the relation of investment and saving is really the key to our present concern about inflation and full employment. By the weapons they have chosen the Government will not be able to cure inflation and still retain full employment. If the Chancellor denies himself the tools for the job, and if he is to be logical and determined to cure inflation—as he says he is—he will only be able to do so by bringing back unemployment. I do not doubt his sincerity when he says he does not want that, but, if he wants to ensure that full employment remains and wants to reduce the volume of inflation, I ask him to look again at some of the suggestions put forward by right hon. and hon. Friends and by some hon. Members opposite as to the use of fiscal methods—physical controls.
Particularly, I would ask the Chancellor to remember "the multiplier." Once the economy gets into reverse it may be much more difficult than he thinks to stop it. To put the matter in a phrase, every man who loses his job does his best to get someone else the sack, simply because he cannot help it. The money which formerly he was spending he no longer has to spend. Once that downward reaction sets in, without the control of the economy—which has been chucked away by the Chancellor's predecessor—the right hon. Gentleman will find it very difficult indeed to avoid, what I am sure he wishes to avoid, large-scale unemployment.
It may well be said by hon. Members opposite, "We have been in office for nearly five years and have not had large-scale unemployment." That is true, except that there was a substantial amount of unemployment in 1952, and after the Korean War we enjoyed a very great advantage in the terms of trade. The prosperity claimed by the party opposite


was largely due to the swing in our favour of the terms of trade in the first three years of the Government's tenure of office. I say this quite sincerely. Lt was also helped by the austerity that had been imposed upon the country by the late Sir Stafford Cripps in the teeth of opposition by hon. Members opposite. Quite contrary to its cheap party propaganda, it did not find an empty cupboard.
This afternoon the Economic Secretary was saying that in 1952 we had a high level of stocks. Quite apart from the high level of stocks which, between 1945 and 1951, the Labour Government had built up, that Government had also built up a high level of investment in the productive parts of the economy. We make no complaint that the people of the country benefited, but the present Government also benefited from the activities and policies of the late Sir Stafford Cripps which at the time they so bitterly opposed.
The biggest problem for the Chancellor is the fact that business expectations and the expectations of the trade unionists and workers generally were aroused by the beautiful talk of last summer. We had the country plastered with posters, and speeches were made on the radio and in every hall about how prosperous we were and how well things were going. It is perfectly true—I think he is moving in that direction—that the Chancellor can get rid of that particular drawback. He can be as brutally frank as was the late Earl Baldwin in rather similar circumstances.
The other main problem of the Chancellor and the party opposite is the philosophy which, rightly or wrongly—I think rightly—is ascribed to that party. How can it ask for restraint and cooperation when it is known as, and, from time to time in this House, when is blatantly seen to be, the party which says that every individual should seek the highest profit? "If you get a chance to do yourself a good turn, take it and devil take the hindmost"—that is the political philosophy of the party opposite.
It cannot say that the system should be regulated by the highest profit and now, at an inconvenient time, want the country operated otherwise. If it sticks to the profit motive, it must expect workers, the trade unions and everyone to take the same view. I believe that

because the party opposite has that philosophy and because expectations have been aroused, we are not only in for a crisis now but for a series of crises. The solution is likely to be that those who can bear the burden least will have most of it to carry. Instead of raising our present standard of living, we are likely to mortgage the future. For those reasons, I urge the Chancellor to give some attention to the very constructive views which have been put forward by right hon. and hon. Members on this side of the House.

7.28 p.m.

Sir Henry d'Avigdor-Goldsmid: I think we must all have rejoiced and been enlightened by the intervention in this debate of my hon. Friend the Member for Aberdeenshire, East (Sir R. Boothby). His diagnosis of the great American economy was intensely stimulating, but I do not think that we should be so carried away by enthusiasm for my hon. Friend as to swallow and give equal weight to everything he said.
Particularly, I was very surprised that, having praised the statistical surveys and the scientific approach of the United States, he should suppose that by introducing import controls in this country at present we should not probably be tearing up the complicated machinery of business which has grown up over the last four years.

Mr. Gordon Walker: It has grown down.

Sir H. d'Avigdor-Goldsmid: This balance of a payments crisis is a new one. It is a new one to me because I have heard of a balance of payments crisis of the sterling area, but this is a crisis applicable only to this country. The fault lies in this country alone, and it is in this country that it must be remedied. Hon. and right hon. Members on both sides of the House have sworn to defend the parity of the £. If devaluation could be protected by words, the £ would be in an impregnable position, but as we very well know, that is not the case. Economic facts are strongest.
We have a limited amount of reserves. I do not want to go over the figures again, but their inadequacy is painfully obvious. They are the reserves not only of this country, but of the entire sterling area, If we fritter them away. we shall have


lost the sterling area. More than that, we shall have cheated those dependent territories who left their balances with us for safe keeping. Unless we can supply those territories with goods and with investment, we can abdicate as a great Power in the world. This is something that we must solve ourselves. We can solve it by many methods, but with one fixity of purpose. No one factor will be sufficient.
I have been all too surprised during this debate to hear no defence from these benches of the policy of my right hon. Friend who is now Lord Privy Seal. [HON. MEMBERS: "We are not surprised."] I propose to remedy that deficiency. Hon. Members in this House are at a disadvantage compared with members of the public, of whom until recently I was one, in not appreciating the weight that is attached to their words. When, before the last Election, one hon. Member after another from the benches opposite threatened the wretched people who were unwise enough to buy back the shares of the steel companies from the Iron and Steel Holding and Realisation Agency that as soon as they got in at the next Election they would take it all away again—they made a great point about the fact that there should be no compensation for profits—they must realise that those words, although they might have been discounted inside this House, carried great weight outside. People were very shy of touching those shares. They were very difficult to sell.

Mr. Jack Jones: Blimey!

Sir H. d'Avigdor-Goldsmid: What I am saying is the truth. It is borne out by the fact that nearly every issue went to a discount after it first came out.

Miss Margaret Herbison: Hear, hear.

Sir H. d'Avigdor-Goldsmid: What happened? My right hon. Friend the Lord Privy Seal, who was then Chancellor of the Exchequer, gave us the feeling that we had an economy that was rebounding and was gaining life and strength at every moment. He gave confidence to the country in a way which, I think, surpassed his own optimistic ideas. When he talked about investing in success, I do not think he realised what a tremendous number of people wanted to invest in it.

This applied to the whole population, as was clearly shown in the Election. People wanted to invest in success. The strength of that investment movement, which was stimulated by the victory of the Conservative Party at the polls in May, entirely surpassed the prognostications of my right hon. Friend's advisers.
Industry felt that it was free. It felt convinced that it had five years in which to make plans. Up to the Election, there was a very real fear that should the Election be won by hon. Members opposite, industry would be in the position of fighting for its life against the Government and of fighting against officials for every single thing it wanted to do. For that reason, industry simply went mad with excitement after our victory.

Sir R. Boothby: Anybody who did invest in success six months ago has now lost 20 per cent. of his money.

Sir H. d'Avigdor-Goldsmid: The working class has not lost 20 per cent, of its money, and its standard of life is being enhanced by our successful investment programme.

Mr. Gordon Walker: Does not what the hon. Member now says explain the curious fact to which he first drew attention: namely, that this is a crisis in Britain only? Just because the former Chancellor of the Exchequer did all these things, we now have this crisis in Britain only.

Sir H. d'Avigdor-Goldsmid: That was what I said. If the right hon. Gentleman agrees with my diagnosis, I am satisfied.
Having seen that burst of enthusiasm, the present Chancellor has taken the right brave measures to control it and has dared to cut down investment, which at this moment had to be done. We have paid dearly for it, but we have bought time. We have at least six months to let the other economic factors come into play. I pray God that we shall take advantage of that time. I hope that some planning is going on. I hope that the approach to our fiscal system which my hon. Friend the Member for Aberdeenshire, East recommended is now being considered.
I do not want to repeat words that have already been used in this House, but I honestly beg the Chancellor to realise, as I am sure he does realise,


that this is the last real chance of the free society and to realise that in the orders he gives he will be followed by those of us who have at heart the knowledge that the free society is greater than any of the members of it and that it is an ideal to which we will devote our public life.

7.37 p.m.

Mr. G. A. Pargiter: I hope not to detain the House very long; nor do I propose to follow the hon. Member for Walsall, South (Sir H. d'AvigdorGoldsmid), who no doubt explained his economic theories satisfactorily to himself, though I hardly think that he explained them satisfactorily to anyone else In the House.
It has been said by successive Chancellors of the Exchequer, not only of the party opposite but also of the party on this side, that the fiscal weapon is a blunt weapon and that when it is used it is liable to hurt friend and foe alike. That is particularly true, and it is showing itself to be increasingly true in the measures that have been used, such as the constantly rising Bank Rate, for the purposes of restriction. Instead of the bludgeon, what we really want is the surgeon's knife to cut away those things that want cutting out while leaving those things which are essential to our livelihood.
Here, I come to the function of a banker or bank manager. He has been told to exercise great caution in the issue of credit, whether on a large or small scale. He has to be especially careful about it. He has been exhorted to look carefully at those projects which come before him which have some regard for our export potential. I submit, however, that that is hardly the function of a bank manager. It is hardly the function even of a banker. His function is to lend money where he sees that there will be a safe return and the money will come back. That may not be true of many of our export industries.
We have been told that the essential function of private enterprise is to be enterprising and that it must take risks to protect the future and to break into new markets with new products. Let an hon. Member go to his banker with something of that kind—unless he has something pretty solid behind it. His banker will say that he is very sorry, but that

whatever the general view may be about exports he is looking after his bank's money and will not lend the applicant any.
We should like to know what the Government propose to do in the light of that situation. The step now proposed cannot be regarded as finality. It may be regarded as a step. It may lead to an improvement, though other people may not agree with me on that. Some unemployment may inevitably result from this policy. It seems perfectly obvious that it will lead to unemployment in the building industry at first.
When there is a large and expanding building force and it is decided to cut down capital investment very largely on buildings and plants, one begins to get at the root of employment in the building industry. If there is a cut in housing and no one can say that it will not be cut at present interest rates, quite apart from the loss of subsidy—it means there is a cut on the building industry. It also means a cut if the present policy is to be pursued, with the Minister of Housing and Local Government issuing a directive to local authorities that he will be very selective in loan sanctions and that none is to be forthcoming for six months at least except for projects vital to industry.
I am not quarrelling with that and saying that it is wrong, but what will happen to the building force? It might be said that there is plenty of work for it, but one cannot make fitters out of bricklayers overnight, nor move labour as freely now as it was possible to move it in the interwar years and even before 1914. I have experience of that in my own area. Tremendous labour forces came in there, but there were houses for some of them and, eventually, houses were built for a large number of them. We have now an inflexible market, and even if we want to move people the answer is that they cannot move because they have nowhere to live. Yet if we do not decrease the labour force we have not achieved anything in investment policy, either in the public or in the private sector.
Unless the Government have made some plans and can tell us what they propose, it is quite obvious that any proposals which will lead to unemployment will be resisted in the industries and the trade unions concerned. It is the duty of the trade unions to resist on behalf of


their members the possibility of their not being employed in the industry in which they have been working for many years. We have to face the alternative of either unemployment or under-employment in the building industry, and we cannot afford either.
Let us look at an example of what is likely to happen to another industry. The motor car industry has been mentioned in the debate, but let us look at it a little more closely. The three great giants, Ford, General Motors and the British Motor Corporation have tremendous expansion programmes. They are already producing twice as many cars as they produced three years ago, and they say that they are going to expand and produce twice as many as they are now producing. But they cannot sell either at home or abroad those which they are already producing.
It would be quite all right to restrict the home market if it could be said that the home market was taking cars which could be sold abroad. We are faced, therefore, with a reduction in the quantity of motors to be produced. That is already taking place, and its effect is shown in serious under-employment in the motor industry, where a large number of workers are engaged on four and a half or four days and even fewer a week. These workers, however, are being retained. The employers are happy to retain them on a four-day week. In fact, the workers are encouraged to stay. Employers provide pensions and sick pay so that workers may be attracted from other firms and retained in the hope that the day will come when they can be fully employed. That is logical from the employers' point of view, but from the national point of view it is disastrous. No worker should be engaged at present on a four-day week, and we should not be countenancing it.
When we say that that should not happen, however, we are entitled to ask the Government what they are going to put in its place. There we are at the crux of the problem. We talk of engineers being engaged in the motor industry, but a great variety of people are engaged in that industry. Many of them are semi-skilled, engaged and trained to do one or two types of jobs, and they cannot do much in other engineering work which may be waiting to he done without some system

of training and adjustment. These people will not give up a four-day week, with a pension scheme and sick pay, to go into another job, chancing that the employer will accept them when they are not trained to do that job. Even in Birmingham and Coventry and similar areas, where there are plenty of jobs available for those now employed in the motor industry, it is necessary to see that those workers are properly absorbed and receive good wages and the training to do an alternative type of work.
If the Government want to do something constructive, it would be very much better for them to do that than to cut down on general investment policy and increase the Bank Rate, because that would permit a more flexible labour market and adjustments in industry. We cannot say that any one industry is bound to maintain a high level of export. Demands and tastes vary in the export market and we must have the methods necessary to produce the export goods on which our livelihood depends.
We might look a little further. Government policy is to reduce imports, and I should have thought that in doing that it was essential that we should be selective. In other words, we should look very carefully at the countries that are taking our exports, for which they are paying by the imports we receive from them. This is not a matter of cash payment. It is very largely a question of the volume of trade between countries. I should have thought that it was necessary to look very carefully at the import question so that we do not damage our export markets in other countries, for that is what we are liable to do. We have done it before. If we are not careful, we shall do it again.
If we reduce the volume of our imports from Australia, for instance, we shall inevitably reduce the volume of our exports to her, because the Australian economy is stretched pretty well to the limit, like ours. Australia can afford to buy only in accordance with what she can sell. There might be in some cases a triangular market between three nations rather than a purely bilateral trade, but essentially the matter conies down to countries buying from us in proportion to what they sell to us. There is nothing in Government statements which we have had from time to time, either from the previous


or the present Chancellor, to suggest that the Government have any method of dealing with this problem by being sufficiently selective as not to damage our export markets.
It has been said that we ought to look for new markets. Where are they to be obtained? One alternative is to produce new products for the export trade. I do not know whether we can sell television sets abroad as a result of our not being able to absorb them in this country. We might be able to sell in the export market some of the electronic equipment which goes into television sets, but that is a very long-term matter.
We must look for these markets in places where we have to offer long-term credits. South-East Asia would be an excellent market. China, if the embargo were lifted, would be another good market for tractors, agricultural equipment of all kinds, pumps and so on. There are large numbers of things which could be exported to China at present. It is obvious that we should need a very carefully arranged credit basis, but it is no good talking about that when we have at present such a ridiculously small supply going into that country and so many of the goods which help to keep a nation more or less alive are regarded as war potential. I am rather surprised that we are content to follow the American line as far as the embargo is concerned, and particularly in regard to China.
If we are to find new markets, we want to know from the Government what they propose to do about this question, because it is the duty of the Government to lead. We look to them for some positive action rather than a policy of restrictions. Restrictions have a psychological effect. The psychological effect of halving the bread and the milk subsidies is far greater than the actual amount involved in the volume of the reduction, and that is one factor which this Government has not taken into account. I must admit that my own side on occasion has caused me to wonder if they were concerned about the psychological effect of their policy. We have now reached a stage when we have to recognise that a rise in the cost of living must automatically bring applications for rises in wages, and no exhortations that we can make and

nothing that we can say or do now will alter that.
The first thing to do to alter that is to stabilise the cost of living before we begin to talk about the question of prices rising against stabilised wages, because that just will not happen. Some hon. Gentlemen opposite may think that we shall arrive at that stage with a sufficient degree of unemployment—not a vast amount, but just sufficient—to act as a deterrent to the wage claims coming from the trade unions. I think this is a false hope, and I hope that there are not many who subscribe to that view. If there are, then I say that the trade unions are in a very powerful position, pressed increasingly by their members because we have been encouraged to believe in an ever-rising standard of living which the Tory Party were going to give to us as soon as they came into office. We have been expecting it to come about, and we must not blame the trade unions for expecting it either. We must put the blame on the efficiency of the promises that were made.
Therefore, I suggest that we have to go very carefully in dealing with the question of wage claims in relation to rising prices. I was aghast, because I thought the least we could have done was to endeavour to maintain the subsidies level where it is now, with a view to commencing something towards stabilising prices, instead of which we are to start on another spiral.
I want to say something about local authority expenditure. The local authorities are naturally rather alarmed about the general position, because they have already got a backlog of urgent work which they should be carrying out. I do not say that they will be less loyal in carrying out the Government's directions than anybody else. Some of them indeed welcome the fact that they are not going to spend so much of the ratepayers' money, but all the time we are building up a backlog of necessary work with regard to public services and investment policy in industries which are vital to the export trade, and we have had nothing from the Government to encourage us to believe that they know the first thing about what the answer will be. Therefore, I think the only possible solution is to accept the Amendment moved by my right hon. Friend.

7.54 p.m.

Mr. H. A. Price: I do not think that many people will be surprised by the attitude which the Opposition have taken in this debate, or will be very impressed, either. I agree entirely with the Leader of the Liberal Party, who said yesterday that, to listen to them, one would think that these problems appeared only on the advent of a Conservative Government.
The fact, of course—as can be amply demonstrated by reference to the history of six years of Socialism—is that nobody is less qualified to criticise than hon. Members opposite, and the best that can be said of their speeches yesterday and today is that, even if every one of their arguments was justified, it is the clearest possible case of Satan rebuking sin. It would be possible for me to amplify that argument at length, but I do not want to do so, because I have a speech of my own, but there is one point which has been mentioned about which I feel I should say something.
It is the position of our gold and dollar reserves. The right hon. Member for Huyton (Mr. H. Wilson) mentioned it yesterday, and others have done so today. It is quite true that during 1955 our gold and dollar reserves fell by 640 million dollars, but I cannot help thinking that hon. and right hon. Gentlemen opposite ought to be very careful before they get too far out on that particular limb. If they analyse the figures, they will find that one-third of that amount went to pay for imports of coal, and that another third went to pay back the American and Canadian dollar loans.
Further, I should like to remind them that, since we took over in October, 1951, our gold and dollar reserves have fallen—as Socialist propaganda was very quick to point out—by 804 million dollars. Set against that were 188 million dollars paid to Canada, 727 million dollars paid to America, and 112 million dollars paid to the International Monetary Fund. It is quite easy to see that, but for these debts, we would have had a surplus of 224 million dollars in that same period. It must be remembered, too, that it was the Socialist Government who had and who spent this aid. We not only did not have it, but have to pay back the debts which they incurred. Not much is said these days about the skeletons which we found

hanging in the cupboard, but the rattling of their bones still keeps some of us awake at night.
I now want to get on to what I intended to be the subject of my speech.

Mr. Arthur Lewis: Hear, hear.

Mr. Price: I readily understand that what I have just said is not readily digestible by the hon. Gentleman, but he must take a Rennies.
I agree with those who have said that the measures announced are entirely restrictive, and that we could solve all our problems by increasing our production. A comparatively small increase in production would solve all our economic problems very quickly, but, in order to get this, we shall need a change of attitude on many fronts. I believe that that extra production could be obtained with the resources that we at present possess and without the investment of a single £ of additional capital, if we could rid ourselves of the restrictive practices which bedevil both sides of industry. Much has been said in recent years about restrictive practices on the part of the employers, and I have made my own position clear on that more than once.
I want to talk this evening about restrictive practices on the part of the employees. These fall very broadly into two groups. First, there are those which are official in the sense that they are authorised and, indeed, insisted upon by the trade unions, many of them accepted, even though unwillingly, by employers, and some of them recognised as being in the interests of health and safety. The second group I will call unofficial. They are usually local in character, enforced by shop stewards without official backing, but as a rule with official knowledge; in other words, they are unauthorised, but winked at.
I will deal with the first group first. This can be sub-divided, and the first subdivision consists of those which fall under the heading of demarcation disputes. The most obvious example, if only because it is the most typical, is the dispute which is raging, and has been raging for months, at Cammell Laird's. This is a dispute between two unions as to which shall drill holes in wood lined with aluminium. The hon. Member who referred to this yesterday


complained that we ought not to put the blame for this dispute on to the trade unions, and that the employers should give a lead.
But the employers did give a lead. The employers made a decision as to which of these two unions should be responsible for the job, but immediately a third union intervened and insisted that it also had rights in the matter, although it is a little difficult to see the basis upon which those rights were supposed to rest. I suggest, however, that the nation has rights in these matters too. We have a right to expect unions to settle purely domestic differences of this kind without making hostages of the rest of us. Another point about that dispute is that last September the T.U.C. took powers to deal with this kind of dispute which it had not had previously.

Mr. G. Lindgren: As a matter of history, the disciplinary committee of the T.U.C., which has been in existence for forty years, deals with demarcation disputes.

Mr. Price: I am aware of that fact, and I am also aware that there was a change of procedure last September which enabled it to deal with this type of dispute which it could not deal with before. It was nineteen weeks before the T.U.C. intervened and so it is hardly surprising that it has not so far succeeded in making much impression. I am entitled to suggest that if it had intervened nineteen weeks ago, before attitudes had crystallised into solidity, it might have made more progress. Now there are hundreds of workers unemployed, thousands more threatened with idleness, millions in dollars of valuable exports held up because of one demarcation dispute. This is merely an example. It must also be remembered when considering this matter that for all the examples which come to light there are hundreds which never see the light of day.

Mr. Cyril Bence: And are settled.

Mr. Price: Yes, but they have to be fought out on the factory floor between the unions. Some are settled reasonably quickly and amicably, but others cause bad feeling and restrict output.

Mr. Bence: And there are thousands settled every year.

Mr. Price: I quite believe it. I see no reason why they should not all be settled.
The second kind of restrictive practice, to which I shall refer only briefly, is the restriction which unions impose upon members entering particular grades or crafts. I do not think that this has much relevance to our present prosperity, but it will have relevance as automation makes progress, and on this score a criticism which I feel justified in levelling at the trade unions is that they are a little slow in changing their ideas in accordance with changing circumstances. On the other hand, since I want to be completely fair, I must say that employers too ought to be a little more flexible in this matter.
The third type of restriction is that of closed-shop policies. I know that trade unionists feel strongly about this but they are not the only people. There are many non-trade unionists who feel just as strongly in the opposite direction. My view is that the closed-shop principle as at present applied is undemocratic, immoral and politically indefensible.

Mr. Bence: What about the Law Society?

Mr. Price: However, at a time when national survival is at stake, and can be better preserved by concentration on other aspects of this problem, I do not propose to make an issue of it.

Mr. Stan Awbery: Is the hon. Gentleman aware that it is the trade union movement which fixes the rates and conditions of the men in the establishment, and surely every man who enjoys the privileges gained by the trade union should be a member of the organisation and should make his contribution towards it?

Mr. Price: I agree, as long as the hon. Gentleman will confine his opinions to the phrase which he used "should be a member." I object to people being forced to be members against their will.

Mr. Awbery: There is a moral obligation to be a member.

Mr. Price: I agree. I support one hundred per cent. trade union membership, but not in the way it is being imposed today. However, I do not want to embark on a debate on the closed-shop principle.
The fourth kind of restrictive practice is the strike, particularly the unofficial strike and those of an inter-union character. No one would seek to deny organised labour the right to withhold its labour when all else has failed, but I find it impossible to understand why employers and the rest of the community should be made to suffer because of inter-union differences to which neither the employer nor the rest of the community is a party. Even where such disputes do not lead to strikes, they lead to bad feeling and to reduced output, and it is high time that the trade union movement adopted for itself a policy which it so often presses upon others, that of the settling of disputes of this kind by peaceful means.

Mr. Bence: It does.

Mr. Price: The hon. Gentleman says that it does, and I am prepared to admit that it often does, but it is equally the case that it often does not, and over recent years there have been far too many examples of this kind at a time when the nation cannot afford them.
The fifth kind of restrictive practice is the objection to work study, time and method studies, mechanical aids and so on. I see hon. Gentlemen opposite shaking their heads, but it is no use their doing so. They cannot dispose of arguments merely by oscillating their heads. The Trades Union Congress, in a publication issued in May, 1954, stated:
We must not be narrow-minded in our quest for higher output—new machinery must be developed and put to work. There are not enough British goods and often they are too expensive…we must develop new lines…efficient production will provide a higher standard of living for everybody.

Mr. Awbery: Does that not contradict the argument of the hon. Gentleman?

Mr. Price: No. That is T.U.C. theory.
Unhappily, trade union practice falls a long way short of it, particularly as to its attitude to devices of this kind, which is one of suspicion and resistance, or acceptance only provided that the number of men employed is not reduced. In other words, such devices are used to make the job easier for the men employed instead of to obtain greater efficiency and output and economy, so that the capital expenditure involved is not justified. Examples of these restrictive practices are legion, but I will content myself with one which

is typical, that of the grain elevator dispute at Hull.

Mr. Bence: That is settled.

Mr. Price: This argument raged for five months. The union in Hull wanted twelve men to operate a device which is being operated in London by eight men, and which most experts agree could be operated by six.
The importance of this kind of dispute can be illustrated by reference to some figures which I have with me on the prices quoted by ship owners and charterers for the shipment of grain from other parts of the world to U.K. ports, on the one hand, and to Continental ports on the other. From the River Plate to London, Hull or Avonmouth it is 142s. 6d. per ton whereas from the River Plate to Antwerp or Hamburg it is 125s. per ton, a difference of 17s. 6d. That is typical of the rates quoted from all over the world for grain shipped to Western Europe. There is a difference of 15s. to 17s. 6d. or £1 a ton. One naturally wonders why, but the reason is obvious. The rate of unloading in the Antwerp-Hamburg range is quoted at 3,000 tons per day and in some ports it is possible to get a 9,000 ton vessel unloaded in one day.
The highest rate of discharge which can be quoted for this country is 1,000 tons a day. Not only that, but one often has to take into consideration the fact that owing to the comparatively slow rate of unloading in this country, vessels have to wait several days, sometimes up to three weeks before they can get into the port to unload. That costs £800 or £900 a day for a vessel of 9,000 to 10,000 tons. If the unloading were done as fast as on the Continent, the delays would be considerably reduced. Dockers on the Continent accept and operate with enthusiasm the devices which are so often resisted in this part of the world.

Mr. Awbery: Before the hon. Member leaves the topic of discharging grain, I should like to say that I can remember the time when a gang of grain dischargers was twenty to twenty-four men and they discharged about 200 to 250 tons of grain a day. They did not adopt restrictive practices when suction plant was brought into operation. They adopted and are working the plant in all ports in the country. Is the hon. Member aware of that fact?

Mr. Price: I am also aware of the dispute which is raging at Hull, which is typical of many and the results of which are reflected in the figures which I have just quoted. The average figure of the extra cost per ton for unloading grain in British ports compared with Continental ports is 17s. 6d. Dockers, or their wives, will no doubt complain about the increase of a penny on a fourpenny loaf. What contribution are they prepared to make to keeping it down? What effort are they prepared to make to match unloading rates today obtainable at Continental ports?
While on the topic of the docks, there are one or two other points I must make. In my opinion, some of the worst examples of restrictive practices comes from the dockers. I have here a letter from a man who was a docker not very long ago.

Mr. Bence: Sir Bernard Docker.

Mr. Price: The man left that employment in disgust, and I asked him to put his reasons into writing. This is what he said:
The men take approximately three-quarters of an hour for each mobile"—
that is, a tea break—
instead of fifteen minutes and 1½ hours for lunch instead of 1 hour, so that they waste 1½ hours each day. The worst culprits are the employees of the Port of London Authority. If the men are given a job for which they will be paid at day-work rates, they hang the job out and will not work. They try to make the work last until 7 o'clock to obtain two hours overtime whereas they could have finished the job by at least 5 o'clock.

Mr. Awbery: I am a docker.

Mr. Price: That being so, if the hon. Member will forgive me for saying so, he can hardly expect me to accept him as an objective witness.

Mr. Awbery: Is the hon. Member aware that 90 per cent. of the work in the docks is piecework and that men do not hang about because they will be losing wages?

Mr. Price: I am sorry, but I do not accept that. These extracts are not my words, but those of a man who has been a docker. There is a lack of mobility which wastes hours. Having finished unloading a hold or a ship a gang can often easily be transferred to another hold or another ship, but gangs insist on returning to the calling on point and

going back again thus usually wasting two or three hours of several men—for which they have to be paid.
Another restrictive practice is the quite unauthorised insistence of gangs on refusing to work until they are fully made up. If there are several gangers short, they will not allow a number of complete gangs to be made up and start work. They insist that all the gangs shall be made up. There is a national agreement which says that short gangs shall commence work, provided they are made up as quickly as possible. That agreement is more often ignored than observed. I understand that there is to be an inquiry into the operation of the Dock Labour Scheme. I hope that it will turn a searchlight on these practices which all help to put up the cost of food and make the ports less prosperous than need be the case.
For a moment, I want to talk about the unofficial restrictive practices usually locally operated, without recognition, by shop stewards. These consist mainly of psychological pressures to go slow and restrict output. I have a long list of examples which I could quote, but I do not have time. If any hon. Member wishes to see it, he may do so. I will quote just one. The hon. Member for Erith and Crayford (Mr. Dodds) not long ago drew attention to the idleness of a group of employees of the London Electricity Board who were working near his home. Mr. Randall, then Chairman of the Board, was asked to comment, and he is reported to have said:
I have not yet seen Mr. Dodds' letter, but I am quite prepared to accept his statement as correct. A minority of L.E.B. employees undoubtedly laze over their work and indulge in restrictive practices…Six men are sometimes sent to carry out a simple job which could comfortably be done by two, but this procedure is imposed upon us by the unions and we have no option but to accept it. Of course, this is an abuse of the nationalisation, but are nationalised industries the only ones in which it occurs?
The answer is, "No." They are widespread throughout industry today and every trade unionist who is honest with himself knows it.

Mr. Bence: I thank the hon. Member for giving way. He is making a general accusation against trade unionists in British industry and saying that they indulge in unofficial restrictions, or go slow on production. It is not long since I


came out of industry. May I assure the hon. Member that in British industry the speed of production is regulated by the production engineer through the machine that produces? Individual machine operators have very little influence over the rate of production of the machine. The hon. Member is talking absolute nonsense when he talks about restrictions.

Mr. Price: I am well aware that what I am saying is unacceptable to hon. Gentlemen opposite, but I am as entitled to my view as they are to theirs.

Mr. Awbery: That shows how little the hon. Member knows about it.

Mr. Price: I hope I may be allowed to finish my speech so that other hon. Members may be called. My opinion is that these criticisims apply to the majority of workers in industry today.

Mr. Bence: Fords and Austins?

Mr. Price: Only a small proportion of workers are really doing their best. When they do their best, they are very often penalised, fined or victimised for what they are doing. I could quote examples of textile workers, coal miners, metal workers and many in other industries in which this is happening today and for every example which comes to light, there are thousands of operatives whose efforts are restricted by the same threat, the same psychological force.
If we remove this, exercise half the extra effort of which we are capable and use the power which science has placed in our hands, we can easily increase our productivity by that small percentage, not more than 5 per cent. at the outside, which is necessary to solve our economic problems.

8.18 p.m.

Mr. Eric Fletcher: The hon. Member for Lewisham, West (Mr. H. A. Price) has made a very unfortunate speech which was far below the very high level which the debate has followed in the last two days. In refutation of what the hon. Member has said it is sufficient to refer him to his much more experienced colleague, the hon. Member for Harrow, West (Sir A. Braithwaite) who, yesterday, paid this tribute to the British working man:
We have the best body of working people in the world—and I have seen work people

in almost every country, including the United States."—[OFFICIAL REPORT, 20th February, 1956; Vol. 549, c. 120.]
That reflects the judgment of most experienced Members on both sides of the House about the quality of the British working man.
At this late hour I want to confine my remarks within a very narrow compass. I have listened to nearly all the speeches both today and yesterday and what has impressed me most is the general recognition shown by hon. Members on both sides of the House of the serious and critical nature of our present economic position. With one or two exceptions, hon. Members on both sides of the House have approached the problem conscious of its gravity.
I do not wish to be unduly controversial, but I think the country must recognise that this situation has been brought about by the lamentable failure of the present Government. We find ourselves in the most serious financial crisis we have experienced for many years, and it confronts our country alone. It is not paralleled abroad. No excuse can be found in world trade conditions. It is not caused by a slump in America, or because of the Korean War or because of the movement of trade is against us. It is due entirely to the failure of this Government to take adequate measures in time to protect our gold and dollar reserves.
The Government stand convicted either of complete miscalculation of the economic trends or, what is worse, of deliberate political dishonesty in not having taken the necessary measures a year ago. I believe it is now obvious that their inaction a year ago was due entirely to the desire to secure a victory at the General Election. We convict them also because, in our opinion, their present remedies are quite inadequate and unsuitable to correct the grave situation that has arisen. I agree with the comments of my right hon. and hon. Friends, and comments which have been made in a great many Tory and independent newspapers, that the most serious criticism of the Chancellor's proposals is that they will result in a serious cut in investment when more selective investment policy is required. The remedies announced will, in my view, do nothing to met the balance of payments deficit, but they will seriously cripple our ability


to deal with the urgent economic situation which confronts us.
The Economic Secretary expressed the hope that we should have orderly expansion without inflation. We all want to avoid inflation and we all desire to see orderly expansion, but we want something more. I wish to ask the President of the Board of Trade a specific question. We understand that there will be some cuts in the education programme, a slowing down of this year's programme and the postponement of certain work until next year. Nothing has yet been said in this debate about the proposed advances in scientific and technical education and research. We are still awaiting the Government White Paper on the subject which was promised several weeks ago.
We were told that the Government were giving a great deal of thought to the necessity for immense development in technical and scientific education. In my opinion, that, in the long run, is essential to provide a solution of our economic difficulties. I hope that the President of the Board of Trade will tell us—for no Government spokesman has yet done so—whether, as a result of the Chancellor's measures, announced yesterday, there will be any change in that programme. So far, we have heard only one or two piecemeal announcements. We have heard that the size of the intake of the Imperial College of Science is to be doubled. We are told that the Lord President of the Council, the Minister of Education and the Treasury, in so far as it is responsible for the work of the University Grants Committee, are overhauling this whole subject. I hope that we shall have an assurance from the right hon. Gentleman that there will be no reduction in these measures to which hon. Members on this side attach great important and to which the right hon. Member for Woodford (Sir W. Churchill) has drawn attention.
I hope that the right hon. Gentleman will be able to go further and tell us that a full measure of expansion in this direction, as contemplated by the Government, will be carried out. One of the major criticisms of the measures announced by the Chancellor is that he is mortgaging the future of this country by immediate short-term remedies. The

Economic Secretary said he believed that right economic decisions must be taken on short-term measures. It is not enough to take the right decisions on short-term measures. It is even more necessary to plan correctly the long-term measures. We have heard a great many statistics quoted by hon. Members and the Government have all the material to enable them to judge the trends of trade and take the corrective measures necessary regarding monetary control. But that in itself, even if the measures taken are right—and for reasons given by my right hon. and hon. Friends they do not appear to be right—will not result in our economic salvation. That will result only from taking the right decisions on long-term planning. We must plan ahead in the technical and scientific fields.
The Economic Secretary mentioned the tremendous development taking place in electronics. The whole nature and pattern of industry is changing. Tremendous advances are being planned and taking place not only in Soviet Russia and the United States but also in Western Germany, Japan and China—among all the industrial nations with which we are competing. We shall suffer not only in the immediate future but in the years to come unless we grapple with this problem now with a seriousness which, up to now, the Government have shown no sign of appreciating.
I hope that we shall receive an assurance that the Government will not be deterred by any obsession about the immediate short-term economic difficulties in which they find themselves because of their own ineptitude, but that they will look for long-term solutions of their economic problems. Having said that, and in view of the lateness of the hour, I shall jettison my other arguments and make this final comment. I hope we shall hear from the President of the Board of Trade that the Government are giving serious attention to the proposal made by my right hon. Friend the Member for Huyton (Mr. H. Wilson), who indicated, yesterday, what steps can be taken immediately, without any administrative or international risk to introduce physical controls.
It is my belief that the Government will realise before very long the inadequacy of the measures recently announced. They will find that they are driven to introduce physical controls, just as the United States


of America do with great efficiency. We have heard no reasons why the Government prefer to adopt the doctrinaire attitude that they will not have physical controls. Before it is too late, before we drift further into an economic crisis, let the Government face the reality of the situation and take the powers and the measures that are immediately necessary for our economic salvation.

8.30 p.m.

Colonel O. E. Crosthwaite-Eyre: It would be fair to say that yesterday much of the time for the debate was spent considering general principles, but today, especially in the speech of the right hon. Gentleman the Member for Battersea, North (Mr. Jay), we got a much more selective and pointed attack on, the Government from the benches opposite.
I was interested to see the attack that has developed during the course of the day on the subject of the removal of the bread and milk subsidies. The right hon. Gentleman the Member for Battersea, North, to quote his own words, called it a "reactionary and regressive tax." He went on again to pursue the line adopted during the debates on the autumn Budget, which was developed by the new Leader of the Opposition, that such action would lead only to a further demand by the unions for an increase in wages. He stated that rather delicately, but it has been put much more clearly during the debate.
I could not help but recall the last time when, as a result of deliberate Government policy, the price of bread was raised. That was following the devaluation, when Sir Stafford Cripps announced that among the immediate results that would flow from his action was the increase of one penny in the price of the loaf. I thought that it might have been a little more honest of some hon. Members opposite when they talked of reactionary and regressive taxes, and all that would flow from them, to remember that the last time this was taken as a deliberate act of policy it was taken by them when they were in power. Not only that, but the right hon. Gentleman the Member for Battersea, North was a member of the Government at the time.
For him to use this high-flown phraseology about reactionary and regressive taxes, and all the rest of it, seemed to me

not to be playing quite fair with the House. When hon. Members opposite seem almost to acknowledge the right of the unions to demand a further wage increase because of this, I would remind them of the words of the right hon. Member for Huyton (Mr. H. Wilson) who, in September, 1949, said:
No one, after the Chancellor's speech, will be under any illusions about the size of the problem that lies ahead of us …that the events of the past few weeks have presented the community with an opportunity of new efforts and a sense of restraint which, if we grasp it, will bring us through to recovery and independence of external aid but which, if cast aside through apathy or thought of personal gain, will be lost, perhaps for ever."—[OFFICIAL REPORT, 28th September, 1949; Vol. 468, c. 194.]
I could wish that some hon. Gentlemen opposite had thought back to that debate and taken the advice of the then Government when they were faced with a similar position, especially as it affected the cost of food.
Yesterday, the right hon. Member for Huyton made a speech which, whether we agreed with it or not, won for him tributes from all parts of the House. I would add mine but I hope he will understand if I say that I quarrel with some of the figures he gave. We heard from him—and today from the right hon. Member for Battersea, North—quite a lot about our gold and dollar reserves. The right hon. Gentleman said yesterday that the average for the years 1949–51 showed an average loss which was less than that in the last year. I am quoting from column 62 of the OFFICIAL REPORT.
The right hon. Gentleman went on to say that in giving these figures he had deliberately deducted the sums of Marshall Aid that had been received on the one hand and any interest payments that may have been made under the Washington Loan Agreement on the other. I think that when one quotes figures of loss they should not be weighted by any arbitrary decision as to what elements should be included and what not included. If that is done we can make figures tell any story that we like.
I am taking the overall figures and deducting and adding nothing. In the three years with which we are concerned, the total amount of foreign aid received was 2,300 million dollars, an average of over 800 million dollars each year. That was what was received. Equally, when we take 1955. the total amount


then received was 114 million dollars. I think that every hon. Member will agree that to try to compare years in which an average of 800 million dollars was received by the Government with one year in which only 114 million dollars was received might given an unbalanced picture of the situation.

Mr. H. Wilson: Perhaps I did not make myself clear. It was a rather difficult point to express in a few words. If I had taken the absolute loss of gold and dollars in 1949–51, and not made a calculation for Marshall Aid, it would have been unfair to the present Government because the receipt of so much Marshall Aid enabled us to have a lesser fall in our gold and dollar reserves. Equally, if I had not excluded from the account the payment which the Government made last December, and to which the hon. and gallant Gentleman referred in a Question last week, that might be considered unfair. Therefore, I was being doubly fair to the Government in excluding all considerations of aid in saying what the trading loss would have been in either of those two years.

Colonel Crosthwaite-Eyre: I am not suggesting that the right hon. Gentleman was trying to mislead the House, but I am suggesting that the figures do not give a true picture. If we take in the three years which the right hon. Member mentioned, when the Labour Government were in power and received an average of 800 million dollars a year, and take the 114 million dollars which we received, we see that if by any chance there had been a greater loss in the three years which he mentioned it could only have been because of a greater absolute loss than occurred in the last year.
I say that we ought to take the figure, when we are considering gold and dollar reserves, in the six years between 1945 and 1951, when Members opposite were responsible for the Government, and when they received, either by borrowing or gift, over 8,000 million dollars in six years, an average of 1,300 million dollars each year. In the last four years that we have been in power the total sum that we have received is 1,000 million dollars, an average of 250 million dollars for each year.
Once again, when we talk about losses, let us remember what hon. Members

opposite had at their disposal. In this case, as I have said, it was something like five times as many dollars by way of loan or gift than it has ever been the good fortune of this Government to secure. As the right hon. Member for Huyton said, we have also to take into account the American and Canadian loans.
Again, if we take the complaint that is made in the Amendment proposed by the right hon. Gentleman that the policy of the Government has helped to reduce our reserves, let us remember that if we had not had to pay back the loan that was incurred by right hon. Gentlemen opposite and spent by them the gold reserves of this country would have been higher when we took office. That is true. Figures given yesterday showed that if we had not made payments of more than 915 million dollars on account of that loan the reserves would now be £111 million higher than they were in 1951.
That is not the end of the story. If we had not also had to pay off the I.M.F. loan of 112 million dollars that hon. Gentlemen opposite borrowed, our gold and dollar reserves would be 223 million dollars higher than they were in 1951. I hope hon. Gentlemen opposite will bear in mind that the burden of the repayment of the Canadian and American loans will confront this country over the next 50 years. As my right hon. Friend the Chancellor has said, it has already needed more than £100 million of exports more than would have been required if devaluation had not taken place, to earn dollars to repay these loans, and over the next 50 years it will mean an extra £1,000 million of exports to earn dollars in order to repay those loans, after what was done by hon. Gentlemen opposite in 1949.
Hon. Gentlemen opposite must face up to what they mean when they talk of selective priorities, of controls, of physical restraint and planning, and all the other similar things. The years when they were in office show that if we start controlling any sector we end up by controlling the whole, in order to make the partial control successful. There is no half way stop. We may say, "We shall try to see that no luxury imports come in". Unless one curbs it, spending power will be diverted into whatever channels remain open. The same is true of building and of other examples given by hon. Gentlemen opposite.
However easy it may be in theory to differentiate, once we started going back to controls we should not be able to stop anywhere short of what Sir Stafford Cripps found it necessary to do in his later Budgets, and in his actions in consultation with the Board of Trade. That level of control could lead only to rationing. However much hon. Gentlemen opposite may say that they have set their minds against rationing I am certain that if they were to try selective controls, and inevitably full control, they would be forced to secure fair shares through rationing by order instead of by the purse.
Much has been hinted at about the difficulties that industry encounters by way of restrictive practices. I agree with the hon. Member who said last night that few of the restrictive practices were in trade union regulations and that most of them had grown up within industry or in the factories themselves. This is a task which the Trades Union Congress should tackle. It is not one for us.
I see a very difficult position arising. No one wants to invalidate the old statement about a fair day's wage for a fair day's work, but undoubtedly, nowadays, a tremendous amount of waste is occurring because those who want to do a fair day's work are not allowed to, but have to wait either for some other union or for some other section of a union to do a particular task. In my view, and I am certain that hon. Members in all parts will agree, those practices do not benefit the worker but merely hinder our total production.
I hope that the trade unions will, on their own, try to sort out those many disputes now going on between themselves, none of which affects relations between employers and employees none of which is in any sense caused by injustice or unfairness in the balance of industry, but which may, as we saw in the Press this morning, result in the dismissal of people, the stoppage of vital work and a general slowing down in that productive effort which alone will enable us to get through our tasks.
Last night, the hon. Member for Newton (Mr. Lee) touched for a short time on a statement made by the British Employers' Confederation. I think I am right in saying that he used the word "brow beating." I should like to remind him that what the statement said was that there was a fear—and, I think, a justified

fear—that in the nationalised industries wage increases are granted which would not be granted in private industry if the same economic terms applied. It stated that the reason for that is that in the nationalised industries the cost of any additional wage claim can either be passed directly to the consumer or, if it cannot be so passed, then it is merely paid for by the State.
That, alas, is only too true, I am afraid. We have seen it. For instance, I have here figures showing the result of the interplay of the nationalised industries of coal and transport during the period between April, 1945, and June, 1955. The retail price of coal was 74s. 3d. a ton in April, 1945, and in June, 1955, was 134s. 5d. The price had very nearly doubled in that time. Out of that increase all but 5s. 5d. is accounted for, year in and year out, first by the pithead increased cost of coal, hastily followed by the railways putting up freight charges because they have to pay more for the coal. Directly that happens there is a further pithead increase, followed by a further transport increase. So it goes on. I hope that hon. Members will think seriously of that fact—that out of an increase in the price of coal of more than 60s. only about 5s. was due to anything except the two causes I have mentioned.

Mr. Frederick Lee: The hon. and gallant Member is instancing the coal industry. Would he fill in a little of the background, and say that the advances received by the miners were just and equitable and that it was, therefore, in the national interest that the miners should receive them?

Colonel Crosthwaite-Eyre: I agree that one must face up to that. I can only go back to the statement made not by anyone on this side of the House but by Sir Stafford Cripps, in 1948, when he introduced that most unpopular Budget to which reference has been made on both sides, in which he said that if we were to meet inflation there was only one condition on which extra dividends and wages could be granted—where there was increased productivity. On that basis, I find it difficult to say that I would agree that all the increases given to the coal miners are justified.
The view has been expressed on this side of the House during the debate, "Let us pay the miners everything they


want if we can get the coal." I do not agree with that. We may talk about a wages spiral, we may take one side or the other, and we may blame one factor or another, but what we tend to forget is that in this vicious spiral the people who are caught are the old-age pensioners and those on small fixed incomes—those whom it is our duty to protect. Every time there is a rise in costs, particularly in the nationalised industries, it is immediately reflected in their cost of living.

Mr. B. Taylor: rose—

Colonel Crosthwaite-Eyre: I cannot give way; there is not time. As I say, these people must pay immediately, whether it be in the price of coal or the price of electricity or the price of gas.
I hope that one thing above all will come out of the debate: that there will be a little less party politics. My right hon. Friend the Chancellor was the first to admit, when he opened the debate, that we on this side of the House and he himself have indulged in party politics in the past. Perhaps, with the seriousness of the situation, that may be ended.
I want once again to quote Sir Stafford Cripps, because it is very important. Right hon. Gentlemen opposite have quoted Sir Stafford Cripps very effectively. It seems to me that in 1948 Sir Stafford Cripps was in the same position as we on this side of the House are in now in having to do unpopular things. One might, therefore, fortify oneself by seeing what he said when he introduced the Budget, in 1948:
The proposals that I have put forward today are, I believe, one more proof that we can, by democratic methods, cope with the most difficult economic situations. The political, economic, and spiritual freedom of our people is of a value beyond all price. We shall only preserve that freedom so long as we are prepared, in critical times like the present, to subordinate our personal interest to the greater good of our country as a whole."—[OFFICIAL REPORT, 6th April, 1948; Vol. 449, c. 78–79.]
I only hope that ill-informed comment such as that about the milk and bread subsidies will now cease and that the Government can continue the job in the spirit in which my right hon. Friend introduced his measures.

8.54 p.m.

Mr. Hugh Gaitskell: A number of admirable maiden speeches have been made in the course of the

debate, and I should like to offer my congratulations to all those who have successfully surmounted their first hurdle on reaching the House of Commons. I would particularly refer to the speeches of my hon. Friends the Members for Greenock (Dr. Mabon) and Blaydon (Mr. Woof). I think we all agree that both hon. Members performed this ceremony, if that is the right word, with exceptional ability. They replace two right hon. Members for whom, I think, the whole House had the very highest respect and affection, and I am sure that we wish them well and express the view that after hearing them yesterday and today we feel confident that they will be worthy of their predecessors.
I think that the general standard of the speeches has also been very high in this debate. I hope my right hon. Friends will not think me patronising if I say that I do not think I have ever heard my right hon. Friend the Member for Huyton (Mr. H. Wilson) or my right hon. Friend the Member for Battersea, North (Mr. Jay) speaking to better effect than they have done in these two days. That, to two right hon. Members who are very skilled debaters is, and is intended to be, very high praise. If I am not quite so full of praise for right hon. and hon. Members opposite, that is not out of any discourtesy, but only that I feel they could not do much with the appalling case with which they have to deal. I would, however, thank the Economic Secretary for his courtesy. He is always polite and friendly, and we always enjoy his economic excursions. This afternoon he did not enlighten us sufficiently about the credit squeeze and the way it worked, but perhaps he will take an opportunity once more to explain to us what he knows so very much about.
I notice that the President of the Board of Trade is to reply to this debate on behalf of the Government. Of course, I mean no discourtesy to him when I say that I did rather hope that either the Prime Minister or the Lord Privy Seal would have been taking part in the debate. After all, it is a very important debate on a Motion of censure, there can be no doubt about that, on virtually the whole of the economic policy of the Government. It is not as if the Prime Minister is permanently silent on economic affairs. There are occasions when he makes


comments upon them, although mostly outside this House. On 9th June last, during the debate on the Address, the right hon. Gentleman said:
The gold and dollar reserves have remained without any significant change since February, and, in all the circumstances, I think that is a pretty satisfactory situation."—[OFFICIAL REPORT, 9th June, 1955; Vol. 542, c. 62.]
At Bournemouth, at the Conservative Party Conference, he was not quite so happy. The right hon. Gentleman said there:
Our economic problems can be solved if we take the necessary measures now. This is precisely what we propose to do.
Then, suddenly remembering that the Chancellor of the Exchequer had done something some months ago, the right hon. Gentleman went on:
The action which our wise and experienced Chancellor took last February and again in July has had its effect.
By the time it came to the Bradford speech, only a month ago, all that gaiety had evaporated. The Prime Minister said then:
There is no slick or swift solution to our difficulties.
We would like to know, after this new development in Government policy, what he would have to say to us tonight, but, alas, he will not commit himself. [HON. MEMBERS: "Where is he?"] The right hon. Gentleman will arrive in time.
The Lord Privy Seal is also not speaking in the debate. I should like to say to him, first of all, that we are grateful for the fact that, whilst he is not taking part in this debate, he still continues indirectly to enliven our proceedings by the after-lunch or after-dinner speeches which he makes in other places. Even if on this occasion we have not had any more port or over-ripe pheasant, we have heard the loud thud of a brick being dropped on the toes of one of his colleagues. I can assure the right hon. Gentleman that if he goes on like that he will keep the Opposition in excellent humour and, therefore, do his job as Leader of the House well. I must comment that what he said at that advertising lunch was rather unusual. I think it bears quotation again. The right hon. Gentleman said:
I am convinced we shall support my successor in any continuation of the policies that I thought it necessary to adopt…

and he went on to say:
and I would like publicly to state that he has my support and encouragement…
but, better still, and for the benefit of the Prime Minister, he added:
and so have the Government as a whole.
I feel sure the Prime Minister is very relieved, after what has been said in other places, to feel that his right hon. Friend is still working with him. I cannot help feeling that it would have been really even better if the Lord Privy Seal had given some concrete evidence of his support for the Government by speaking in this debate. He would then have been able also to defend himself against the charges which have been levelled against him, from many quarters, in the course of the last two days.
We have instead the President of the Board of Trade. He is a very fine debater, but he, too, is a little handicapped. He has been intimately concerned with this policy which is under review, but he also happens in the course of it to have developed into the champion of rising and ever higher consumption, which is now to be cut down. We shall at least await with interest what he has to say to consumers this evening.
The Chancellor remarked quite early in his speech that we were agreed, he thought, upon the diagnosis and that the Amendment of the Opposition proved it. I think he was confusing description for diagnosis. Certainly, the Amendment describes accurately what has happened in the past year. They were the Chancellor's own words, and we have taken them. But a mere description is not an explanation of why these things have happened.
Merely to state that the economy is overloaded is not to add anything to what we were told by the right hon. Gentleman's predecessor nearly a year ago. We have to ask: why was the economy overloaded? Why have the steps which have been taken since then not managed to lighten the load sufficiently? What has gone wrong? Has the instrument used by the Government not worked properly?
We are, after all, discussing this evening the fourth series of measures adopted by the Government in the past year. First, we had the rise in the Bank Rate and the hire-purchase restrictions last February. After the interval of the General Election, we come to July, when fresh cuts both on investment and hire


purchase were announced. Then came the autumn Budget of October, and now we have the "little Budget," as some people have called it, of February.
The Chancellor may feel inclined to say, "After all, I need not say anything about all that. It is not reasonable to ask me to do so because I was not responsible for it." We cannot, however, accept that doctrine, although the Minister of Education, whom we are glad to see here this evening, appears at fairly frequent intervals to be saying that he believes in something in which the rest of the Government do not believe; but that is not an example which we could commend to the Chancellor of the Exchequer.
To all this question of diagnosis, the answer has been given already in this debate in the two masterly speeches of my right hon. Friends the Members for Huyton and Battersea, North. I do not intend to waste time going over all that ground. I will say two or three things only about it. First, I think it is agreed by all that the present situation owes its origin in no way to external conditions. In that respect it is in great contrast with the crisis of 1951. Perhaps I might say a word about that, because various hon. Members have referred to it and I should like to reply to one or two of the points that have been made.
In 1951, a very sharp deterioration in the terms of trade took place, thus imposing upon this country an additional burden in one year of around £500 or £600 million; those are the official Treasury figures. I would say to the hon. Member for Oldham, East (Sir I. Horobin), who rightly drew attention to the fact that normally we have, as it were, an increment of production every year, that what makes really serious difficulties for any Government is if there is suddenly imposed upon them in any year a tremendous additional burden. That is what happened in 1951.
I am not standing in a white sheet and saying that we did everything that was perfectly all right—obviously, we may have made mistakes—but I am saying that I think the overwhelming reason for the crisis that year was the sharp change in the terms of trade. It coincided, unfortunately, with the decision, that was generally supported in the House, to begin the very heavy rearmament programme.

In neither of these respects, of course, is there any comparable situation in the present or in the past two or three years.
Secondly, as far as the gold and dollar figures are concerned, it must be borne in mind, when comparing the rate at which the decline took place, that they were falling in 1951 from far the highest level ever reached after the war, a high level which was achieved—and I think that I made it plain at the time—by the very high prices which sterling area materials achieved in world markets. The other countries of the sterling area built up their balances here and, after the collapse in prices, proceeded to draw them down again.
The present situation, however, is entirely different. Perhaps the best way to describe it is not to use words of my own but to quote three things which Sir Oliver Franks has recently said about it. I hope that nobody will think that I seek to draw Sir Oliver into politics. That would be my last desire. He has served our Government and the Conservative Government well, and we all respect him immensely, but he was speaking as a bank chairman. He said:
Conditions in recent years could scarcely have been more favourable to the building up of a strong reserve had our policies been directed primarily towards that end. The volume of world trade has been expanding; the terms of trade have not been too unfavourable; the rest of the world has been gaining gold from the United States. It is a sobering thought that the purely regional currencies of Western Europe are collectively backed by exchange reserves four times as large as those supporting sterling, the currency in which nearly half the trade of the world is conducted. Since the end of 1951, the Continental countries have accumulated some 5,000 million dollars of gold and dollars; our own reserves have actually fallen on balance and are indeed lower than in 1945, when prices were half their present level. This is a state of affairs that we must surely all find deeply disquieting.
I think that that is not an unfair description of what has happened and the situation in which it took place.
I would quote, secondly, something else which Sir Oliver Franks said about the more immediate situation:
…all the major decisions of policy in the economic sphere during 1954 were of a nature to stimulate activity and release additional demands upon the economy, not to exercise a restraining influence.
He traced the source of the trouble to what happened in that year. I remind


the House that that is exactly what I said in the Budget debate in April this year.

The Lord Privy Seal (Mr. R. A. Butler): I did not want to take part in this debate, but did not the right hon. Gentleman himself want to support the encouragement of investment in that year in particular? Was I not pressed by the Opposition and the right hon. Gentleman to do so, which is one of the main points to which the right hon. Gentleman is now referring?

Mr. Gaitskell: I certainly favour a high rate of investment, and I shall have more to say about that later. But to say that we support a high rate of investment is not to say that we support all the other expansionist measures in which the right hon. Gentleman indulged.

Mr. Butler: Perhaps the right hon. Gentleman will remember that in the Budget of that year, with a particular desire to be careful, the only incentive introduced was the investment allowance which was pressed for by hon. and right hon. Gentlemen opposite.

Mr. Gaitskell: I am, however, not only referring to the Budget of 1954. I am referring to the decisions taken in that year, as was Sir Oliver Franks. Perhaps hon. and right hon. Members opposite have forgotten that it was in the summer of that year, just as the inflationary situation was developing, that the right hon. Gentleman removed all the restrictions on hire purchase, that he was proceeding through the whole of that period to increase the degree of liberalisation and moving as fast as he could towards convertibility. I thought that all those things were dangerous, and I said so in April, 1955.
Finally, Sir Oliver Franks said:
By every test the position at the beginning of 1955 was an inflationary one.
That hits off precisely what was the background of the whole of this unfortunate situation. What has happened is that there has been not a sudden crisis but a gradual slide on our own momentum, started by ourselves, to which the Government contributed by too rapid decontrols, by failing to realise soon enough what was happening, by not putting on the brakes when they realised what was

happening, and by positively accelerating the rate by what they did.
I do not desire to linger over all this, but I want to ask hon. Members opposite these questions. Do they really believe that the Government's monetary policy and credit squeeze has worked out just as they hoped it would when it began last February? Do they really think, in the light of what has happened, that the decision to make tax concessions of £140 million in the April Budget was wise? Do they really believe that the Chancellor did the right thing in agreeing that our payments in the E.P.U. of gold should go up to 75 per cent. during the summer? Do they really feel, in the light of events, that the autumn Budget made a useful contribution to saving the country from this crisis?
I cannot believe that any hon. Members who think seriously about this matter can give positive affirmative answers to any of these questions. Can they, indeed, really say that this is a story of firmness and resolution? I would describe it as a combination of technical incompetence, bad doctrinaire policies and a persistent tendency in an Election year—1955—to put short-run party advantage above the long-term interests of the country.
In consequence of all this, we now have a crisis, and perhaps it is an advantage that at last it is admitted that it is a crisis. That, at least, the change at the Treasury seems to have achieved. The Chancellor spent a great deal of his speech saying why he would not use physical controls. He was opposed to import controls partly on the grounds that they are difficult to administer—and I would not deny that—partly on the grounds that they involve rationing, and partly on the grounds that they involve retaliation. I would say, first of all, that I cannot understand why he gave such a wholesale condemnation to import controls. After all, one-fifth of our imports are still subject to import licences, yet they do not give rise to retaliation. They do not seem to give rise to great practical difficulties, and they do not involve rationing, and yet half our dollar imports are still subject to import licensing.
Australia maintains import licensing, yet, as far as I know, there is no rationing there, and, of course, France, too, has had her periods in recent years of strict


import controls, and still has some, as have many other countries. I must say that I do support what several hon. Members opposite have said, and particularly the hon. Member for East Aberdeenshire (Sir R. Boothby), whose speech was reported to me, because I was unfortunately out of the House at the time. I know that he said that whatever may be the merits of this question in principle, if one looks at it quite concretely, when we have the very low reserves we have at present, it is an extremely risky business to say we will have nothing to do with import controls at all.
I do not want there to be any misunderstanding. We have never said that we should in these circumstances rely solely on physical controls. We have always taken the view—and I have expressed this many times from both sides of the House—that we believe in a combination of monetary and physical controls, but the reason why we do not agree with the sole reliance on monetary controls, which is this Government's official policy, is that physical controls surely do enable us to block up, as it were, the weak spots in the economy and therefore promote a generally higher level of demand and employment at home.
I want to say one other thing on the matter of physical controls. The Chancellor's attitude on it was not entirely clear. He did not, apparently, take what one might call the extreme laissez-faire view. I should like to ask him—and perhaps the President of the Board of Trade will reply—whether he really has once and for all abandoned the idea of physical controls. I think he would be extremely unwise if he were to say "Yes" to that. It may well be that, after all, we shall have to come to these controls, and it would be a great pity if, because of anything he said here, he was deterred from using them later on. However, for the moment we are not to have them, For the moment we are to have monetary controls only. The Government are to concentrate wholly on cutting down demand while, at the same time, trying to preserve full employment.
We have a number of criticisms to make of this policy. The first is this. The Chancellor has declared himself for full employment, and we welcome that declaration. But I am bound to ask

him this question: is the right hon. Gentleman really satisfied that by relying solely on these general measures of deflation he will be able to preserve full employment? He cannot, I think, dismiss so lightly the arguments of what he calls the economists in this matter. I agree that some of them use foolish language and speak in terms of the desirability of unemployment, but the logic of their argument is plain.
The logic of their argument is that if we have, as they would wish to have. because they are believers in laissez-faire, only a general control, then in order to reduce imports we must reduce production, we must reduce orders, we must reduce overtime, we must encourage, in consequence, some short-time working and some unemployment in some places. Because it is only in that way that the demand of industry for the raw materials which are imported will come down.
We have described those arguments ourselves many times in the House, and I must press the right hon. Gentleman on it again. What exactly does he envisage happening to production as a result of Government policy? The rate of increase in industrial production has already declined. It is only 3 per cent. above the level last year. Does he expect that this rate of increase will go down further? Does he expect that there will be as many people employed? Does he think there will be as much overtime? Would he tell us exactly how he thinks that the credit policy and the restriction of demand generally will produce the cut in imports which is so necessary?
My right hon. Friend said he thought there was some danger of the Chancellor walking backward into unemployment. I would put it a little differently. I think that the greater danger is that he walks forward towards it, but in his sleep. [Laughter.] Well, he was rather somnambulatory during his speech, as my right hon. Friend said.

Mr. H. Macmillan: Jolly good.

Mr. Gaitskell: I hope that the right hon. Gentleman is not offended by this suggestion?

Mr. Macmillan: indicated dissent.

Mr. Gaitskell: If I were the right hon. Gentleman, I should have thought it was


nicer to walk forwards rather than backwards.
The second objection or criticism that we have to make is that all this has been presented to us without any precise figures. Apparently cuts are being made on what the Chancellor thinks, but does not know, would have occurred by amounts which he cannot even estimate in total. That makes it hard for us to be sure that the process will not be carried too far.
The third criticism we have is that predominantly—I think even the Economic Secretary will agree—these new measures involve a severe cut in investment, at any rate below what it would have been. Here the major fact facing the country is this: in Russia, in Germany, in the United States, in Sweden, in nearly every other industrial country in the world the percentage of resources devoted to investment is a great deal higher than it is in Britain. We want to see that percentage, that proportion, rise. We encouraged the Lord Privy Seal in his efforts as Chancellor by the investment allowance to stimulate investment. It is really deplorable in those circumstances that we should have to cut back on the very thing on which our future productivity and prosperity depend.
But if investment is to be cut back, there is surely a case for some priorities and for some regulation. I cannot accept the rather feeble argument of the Economic Secretary that it is all very difficult to decide between this and that. The Government are making these decisions all the time in their own sphere and bank managers are forced to make them in the private sphere. Why not take on the job properly and accept responsibility and get the priorities right?
I come to consumption. Here, I propose to confine my remarks to the cuts in the subsidies on bread and milk. The defence of them by the Government is, first, that if total consumption is to be reduced, we ought to stop subsidising part of it, secondly, that after all the wealthy as well as the poor people benefit of the subsidies; and, thirdly, that for some reason or other the onus of proof is on those who wish to continue the subsidies.
Let us get down to real issues. First of all, this idea that we ought not Ito give subsidies because Surtax payers get

them as well. That would be convincing if the hon. Gentleman were using the £40 million now given in subsidies to give it entirely to people who really are in need of the £40 million. Of course, he is doing nothing of the kind, and we cannot accept that very evasive argument. The real fact of the matter is that this cut in the subsidies is precisely the same in its consequences as if we were taxing bread and milk and its effect, as the Economic Secretary has admitted, is exactly the same as the tax on household necessities in the autumn Budget. It is not so much that there will be a reduction in the consumption of bread and milk, but that those people will be forced to spend less on other things.
The point, of course, is that the people who will be forced to spend less on other things will be those who have to spend most on bread and milk. As my right hon. Friend the Member for Battersea, North said, it is not merely a regressive tax, it is an extremely regressive tax, and we really cannot accept the fact that it was necessary at this stage, if consumption had to be cut, to impose this very severe burden, as it will be, on people with low incomes. We cannot judge this apart from the substantial concessions which have been made in recent years in the Lord Privy Seal's Budgets to Income Tax payers, to Surtax payers, to the Profits Tax people, the companies and wealthy individuals generally.
I pass to what I believe to be the main issue involved. A notable feature of the debate has been the growing disillusionment of the Tories with their own policy. That has been quite obvious from a number of back bench speeches. Our social objectives differ, but we do have certain national economic aims in common: full employment, a balance of payments surplus, high productivity, high investment, bigger gold reserves, stable prices. It is fair to say that right hon. and hon. Gentlemen opposite up to now have believed that these things could all be achieved in their free-for-all economy. I cannot say that I have found them so confident today. How can they be, in the light of the record of the last year and indeed of the last four years?
They are also less confident about a number of their nostrums. "Cut public expenditure" was always one of their favourite cries, and one Chancellor after another had to say that could not be


done without touching policies. They used to believe in the Bank Rate and its automatic, simple little mechanism. They are not so enthusiastic about that now. And they have not much cause for enthusiasm about the incentive effect of reduced taxation.
The choice before us is clear, and perhaps one of the good things of the debate is that it has brought out that choice. We can have stable prices with freedom, but only provided we depress demand, productivity, investment, profits and employment. We may even have a balance of payments surplus at the end of it, but we will have that at the cost of reducing living standards, not only by the amount necessary to get our balance of trade straight, but by a lot more by reason of the short-time, low production and unemployment which it is bound to cause. If we do not have this and we want full employment, we can have it; but we cannot have it with a free-for-all policy if we want stable prices as well. There must be some control at the weak points. There must be something else, too; there must be understanding of some kind about wages, prices, profits and dividends.
This is not an easy job, and I am not going to pretend that it can be laid down in black and white in advance. But I believe that one essential condition is necessary. Let me put it this way. We shall not get the self-discipline for which the Chancellor appealed, and a sense of responsibility and restraint and an absence of a sectional point of view, unless and until the various groups and sections feel that the restraint for which they are asked will involve fair play between them. We shall not get this until we have a general feeling that the outcome of the whole thing is just and reasonable.
I do not say that this means the achievement at once of all our full Socialist ideals of equality. But I do say that, first of all, something must be done to deal with the case of those who get their money far too easily today. I have in mind particularly those who are living on inherited wealth and spending capital. I have in mind those who have lived, for some time at any rate, on capital gains, and I would add also those who get, as most people believe, undue expense allowances.
I would say, secondly, that if there is to be any chance of this the Government must at least show that it is in this direction they intend to move. It is because we believe that the Government and the new Chancellor have not apparently grasped this essential lesson of the last few years, and because the so-called new measures move, if anything, in an opposite direction, that we can have no confidence in their ability to master the economic problems facing the country. It is for this reason that we shall go into the Lobby to vote for the Amendment tonight.

9.28 p.m.

The President of the Board of Trade (Mr. Peter Thorneycroft): We have reached the end of a two-day debate on an important and serious issue. May I say to the right hon. Member for Leeds, South (Mr. Gaitskell) that I share with him the comment he made on the five admirable maiden speeches delivered in the course of our discussions yesterday and today, particularly the speeches of my hon. Friend the Member for Hornchurch (Mr. Lagden) and the hon. Member for Blaydon (Mr. Woof).
Very often, when it is publicly reported that a debate in the House of Commons will be hotly and bitterly contentious, it proves otherwise. I am bound to say that in this debate there has been far less bitter controversy than many people would have foreshadowed, and a far greater desire by hon. Members on both sides of the House to address themselves to the series of problems which, to tell the truth, have stretched the ingenuity of both political parties during the time they have been in office.
The right hon. Member for Leeds. South was a little critical that I was intervening in the debate. He said that I had been very intimately concerned with the policy we are discussing. That seems to me not an unreasonable qualification for offering a few words towards the end of the discussion in defence of it. The Manchester Guardian, in a comment the other day—and there has been much comment on this subject—suggested that all the political parties could approach this matter with a certain modesty. I think that is probably right.
I do not know whether modesty was the principal qualification of the right hon. Gentleman's speech. True, he put


aside the white sheet—he was rather wise to put it aside—in which he has previously appeared in defence of the situation arising in 1951, but certainly he does not appear as an Iron Chancellor who has faced and beaten any crisis which has confronted him. The right hon. Gentleman left in 1951, and, to the best of my recollection, the only measure which we can trace that he took to deal with that situation was the imposition of quota restrictions on the import of cheese into this country. He still has a hankering after these physical controls.
The right hon. Gentleman devoted some part of his speech, once again, as he did in a recent speech in the country, to the April Budget. Anybody who listens to him on the subject of the April Budget would think that the Socialist Party was advocating severe deflationary measures at that time, and that it fought the subsequent Election on a policy of peace, retrenchment and reform.
I must remind the House that the truth is a little different from that. In fact, the right hon. Gentleman at that time was advocating cheaper money. He did not vote against the 6d. off the Income Tax; he merely urged that it should be extended to the lower ranges. He and his hon. Friends wanted the tax off beer and tobacco, something done about Purchase Tax and rather less imposition on diesel oil. They went into an Election with a manifesto which would have involved very substantial increases over a wide range of expenditure. If ever policy was dictated by short-term party advantage, it was that. I hope the House will forgive me for answering in debate at least one or two little points which have been put.
I turn to the more serious part of the right hon. Gentleman's speech. He said, again, that if the measures which we proposed were pressed forward they would lead to unemployment, they would damp down production, they would reduce overtime, and so on. I do not believe that anyone in this House desires to pursue a policy designed to secure unemployment. I do not believe that is true of anybody in the House, but, equally, surely nobody imagines that a situation in which there are about half a million unfilled vacancies is one which is other than considerably damaging to our economic situation.
The right hon. Gentleman asked me, "What about production?" Obviously, no one will make guesses about the future course of production, but this I will say: the principal obstacle to production today is the overstrain in the economy. It is just when we get to a situation where we are short of skilled manpower or essential materials, like steel or components, that production is held up. It is that overstrain which is likely to hold back production, and it is the removal of that overstrain which must be the principal objective of all political parties.
There is only one other comment which I would make about his remarks. One can make all these points in debate, but to say that the removal of a subsidy has the same effect as the imposition of a tax is, I think, straining the truth pretty far. When Sir Stafford Cripps placed a ceiling on the food subsidy, I do not remember anyone saying that he was taxing the food of the poor.
If I may mention one other speech which was referred to in the course of the debate—and I hope to deal with several in the course of my remarks—I should like to mention the speech of my right hon. Friend the Member for Aberdeenshire, East (Sir R. Boothby) in what he called a "fifteen-minute nip." He covered a good deal of ground in his fifteen-minute nip. He loudly praised—and rightly praised—the economy of the United States and the skill with which our American friends handled their affairs. It is worth observing that the United States is essentially a country which uses with great force and skill monetary and fiscal methods. It does not devote itself to the physical controls which are urged upon us by the party opposite.

Mr. Gaitskell: This is a very important point. I think it right that the right hon. Gentleman should continue by giving another fact about the United States, which is that the level of unemployment is about three million.

Mr. Thorneycroft: I do not know whether the right hon. Gentleman is urging us to go towards that figure. The right hon. Gentleman made one other point which I should like to mention. [HON. MEMBERS: "Answer."] The answer is that I am aware of that. [HON. MEMBERS: "Answer."] The right hon. Gentleman referred to the unemployment figure in the United States. I say that


I am perfectly aware of it. My right hon. Friend made one other point which was, I think, of considerable importance.

Sir R. Boothby: On a point of order. My right hon. Friend is continually making me a Privy Councillor.

Mr. Thorneycroft: My hon. Friend made one other point of considerable importance when he said that all of us need the same kind of statistical information that is available on the other side of the Atlantic. I hope that I will carry right hon. Gentlemen opposite with us when I say that I think that is a point which is fairly made and that whichever party handles it, whether use is made of physical or other forms of control, we certainly need all the statistical information that can be made available.
The main theme of the speech which the right hon. Gentleman made was that the Government measures were wrong, that many of them might do harm in fact to the economy, and what was wanted was a wide range of physical controls established over the whole field. The first thing which I would say—and I hope clearly to the Opposition—is that whatever the merits of physical controls may be—and we can debate those in a moment—they do not provide in any sense of the term an alternative to the measures which the Government are putting forward. They are not something which can be done and then omit the measures which the Government are here proposing.
To take the clearest possible example—a cut in imports by physical controls—the truth is that a cut in imports in any sense of the term cannot cure inflation. On the contrary, it is likely to make it substantially worse. If import cuts are to be proposed by the right hon. Gentleman, then it would be logical for him to come forward and say, "I support the Government in their policy in reducing the general level of demand." A policy which at one and the same time urges a physical cut in imports, cheaper money and subsidised consumption seems to me to be a policy which is likely to lead as quickly as possible to financial chaos in this country. That is the policy advocated by hon. Members opposite.
Let me say one word about the background to the measures that we have

adopted. It is a background of very considerable prosperity. Never at any time, probably, have the great majority of the people of this country enjoyed as high a standard of life as they do today. That standard is rising and there is no doubt that if we control our economic situation properly it will continue to rise.
Take any standard that we like of the things which people buy for their homes. That is what really matters. Whether we measure it on the basis of consumer durable goods, radio and television, or measure the real increase in wages, it spent on entertainment, tobacco or food, or measure the real increase in wages, It all shows that the standard of life of the overwhelming majority of the people has steadily gone up.
I know that, in addition, there has been a considerable transfer, not of wealth, but of spending power. I know that wages and salaries have risen by nearly 40 per cent. since 1938, while rents, dividends and interest have fallen by 40 per cent. I am not debating whether that is right or wrong, or the pace of the transfer. I know that a man in the managerial classes who would be earning £2,000 a year before the war would have to earn something like £12,000 a year now to attain the same standard of living. Making allowances for all that, the general picture is one of great prosperity very widely shared.
My hon. Friend the Member for Oldham, East (Sir I. Horobin) asked me, for the growth of our income since 1952, in real terms. I cannot give him the figure for the inflationary gap, but I can give him the figure of the growth of our income in real terms. It is of the order of £300 million or £400 million per year. That reflects what we have to do, which is not to try to absorb all that sum, but, as my hon. Friend suggests, to let it fructify in the form of investment and exports.
The general picture is the reverse of that of the 1930s. That was a picture of relative stability of prices with high unemployment, but it has given way to rising prices and more jobs than men to fill them. It is against that background of great prosperity that we make our proposals suggesting some moderation in demand spread right across the board and including consumers, the Government and investment.
Now with regard to the measures themselves. I observed the other day in the News Chronicle an interesting Gallup poll which asked various questions of the public. It demanded to know their solution to this problem. What emerged was, as the News Chronicle very fairly brought out, that 88 per cent. of the replies wanted a painless cure for inflation. We can heartily endorse that wish on both sides of the House. It would be nice if such a choice were open to us, wherever we may sit. If it were possible, for example, to have price control, I do not say without rationing, which is perhaps a controversial word, but without allocation in some form. it would, no doubt, be pleasant. But it would not remove the duty of a Government to see that demand was marginally reduced and to reduce prices in that way.
Moderation is obviously a good thing in any of these fields. If dividends were restrained it would be a good thing, but it would surely not remove the duty of a Government to create a situation in which it was a bit harder to earn a profit, and perhaps a little easier to keep one. The same applies, if I may say so, to wage restraint on a voluntary basis. I may say that this country is indeed fortunate in one thing—it probably has a higher degree of statesmanship in its trade union movement than has any other country in the world today. But what is the principal difficulty of any trade union leader who urges moderation? His principal difficulty is to live in a situation of constant inflation, and the way to help him in urging moderation is to remove the inflation itself.
The truth is that there is, of course, no painless way of curing inflation. The essence of the business is that everyone should ask for a little less—the consumer and the business man—and it is not a pleasant thing to ask for less. The measures that we propose are, if I may say so, a continuous process. The credit squeeze has been going on for quite a time. Firms that have been denied overdrafts have, in fact, been forced upon the market, and if anybody has any doubt that the credit squeeze is operating they only have to move a little in business circles to find out quite clearly what, in fact, is happening.
We have now proposed further measures. First of all, there is the Bank Rate. I shall not enlarge on the arguments

addressed' to the House by my hon. Friend the Economic Secretary this afternoon, but from the right hon. Gentleman's statement just now I do take it that he agrees that monetary measures must form some part of any attack, or of any proposals that are put forward for dealing with a situation of this kind. The money rates have a part to play. We are also all agreed that they are not, by themselves, sufficient and we have, therefore, reinforced those measures by certain forms of action which should affect both consumption and investment.
The Government measures are attacked from two sides. It is said that we are attacking the consumer and thus driving up the cost of living and giving an impetus to wage claims. That is the first accusation that is made. Secondly, we are accused of attacking investment and, therefore, of climbing out of the present troubles by pledging the future. Paraphrased, speech after speech has been made on those lines. But if neither consumption nor investment is to be affected it really is a little difficult to see how we are to deal with an inflationary situation.
Let me take consumption first. It is necessary to damp down consumption for two reasons—because of its effect upon the demands on our resources, and because so long as consumption is booming investment will boom too. After all, business men judge their investments on their view of a market, and if they think that a situation exists in which a consumption boom is to be a continuing feature they will invest, and they will invest specifically to meet a home demand. Therefore, on both those counts, I think that any one who looks at the matter fairly would judge that consumption must have some part in reaching a solution to this problem.
I shall not argue in detail the various measures which are proposed, but, in effect, the hire purchase restrictions will mean that consumers will have to use rather more of their own, and rather less of borrowed money. In the case of food subsidies they will buy marginally less of other things.
The hire-purchase restrictions are, after all, a pretty orthodox way of dealing with a situation of this kind. If I may call the attention of my hon. Friend the Member for Aberdeenshire, East, to this matter,


I observe that the President of the United States of America is asking for powers to impose restrictions of this kind if he deems it to be necessary. They are used in Sweden and Denmark, where they have quite respectable Socialist authority behind them. The proposals which we make cover deliberately a wide field of goods in order to affect the general demand on consumption.
There is one ancillary matter to which I should like to refer and that is the control of hiring. I am not here speaking of the evasion of hire-purchase but of a perfectly normal and natural change of method which has grown up as hire-purchase terms have been stiffened. Instead of hire-purchasing the goods, the property ultimately passing to the purchaser, the practice has grown increasingly of people hiring the goods, television or radio sets or refrigerators. I hope the House will agree that it is necessary to deal with that at the same time. We have accordingly instituted on this occasion an arrangement whereby some nine months' rent must be deposited upon the hiring.
If we are to operate against consumption, I think it is right, and I hope the House will agree that it is right, that we should operate to some extent upon investment, too. Investment, after all—and we can be proud and thankful for it—has been growing. It rose by 18 per cent. last year and, on the estimates which we have in the Board of Trade, it looks like rising by 17 per cent. next year.
We have adopted the whole variety of arrangements to which the right hon. Member for Leeds, South has referred not for the purpose of putting a stop to all investment, but for a moderating demand in that field as in other ways. It is not wholly unreasonable that in a period of this kind we should suspend allowances which encourage investment of this sort, nor do I think it a fair assumption, if I may say so to the right hon. Gentleman, to suggest that in a free economy all those things are done which ought not to be done and a lot of things are not done which ought to be done. I do not think that is the way in which a free economy naturally works.
In addition, we have proposed a series of reductions in the expenditure of the nationalised industries and of the Government Departments themselves. The hon.

Member for Islington, East (Mr. E. Fletcher) asked me particularly about technological education. It is no part of our policy to cut that back. I think he was absolutely right to impress upon the House the importance which he attached to it. Few matters can be urged as of greater importance in the kind of world into which we are entering today. Indeed, one of the reasons that we are postponing the start of some work is to adjust matters in the building field of education so that that kind of programme can go forward uninterrupted.

Mr. Lindgren: rose—

Mr. Thorneycroft: I cannot give way. I have only five minutes.
I wanted to reply to many hon. Members who have spoken, some on each side of the House, who asked about import restrictions. I am not doctrinaire about these matters; indeed, I was a member of a Government who introduced a great many import restrictions. The reason for not doing so now is a practical and not a theoretical one. It is that we do not think they would benefit the country in the present circumstances
Much has been said about the increases in imports flowing into this country. May I emphasise that the increases in imports into this country are not made up of such things as handbags from Italy. They are the imports created by the solid demand of expanding industry. They are coal, £57 million; steel, £71 million; non-ferrous metals, £57 million; metal ores and scrap, £26 million; oil, £24 million; timber and wood, £50 million. I could run through the list but I will not detain the House. Case after case which has been put—and perhaps I may point this out to the right hon. Member for Huyton (Mr. H. Wilson)—has been based upon a false assumption that somehow or other an easy cut could be made of inessentials. Part of the trouble is a misunderstanding about the word "manufactures." Manufactures are not consumer goods. The vast part of them are the essential equipment and many semi-raw materials of industry, machinery, metal goods and the like.
I hope that when people realise that, they will understand that our objection to import restriction is really two-fold. First, it is that most of these imports—in fact the vast majority—are essential and a cut in them must lead inevitably either


to savagely rising prices or to a strict allocation and rationing scheme. The rest are the type of goods which would lead almost automatically and immediately to retaliation. After all, we should be cutting imports against a background of inflation which many countries would say should be cured and tackled by the kind of measures the Government are proposing to the House this evening.
For ten years we have faced a situation of varying difficulty and intermittent danger. There is no painless way of curing it, but certainly the pain of not curing it would be much harder and more lasting than any sacrifice that is asked

for here. We are not doctrinaire in the cure we put forward. We reject physical controls because we think they would not help us. We realise that all must share in this matter, employer, worker, investor and consumer. These measures are designed to curtail demand. We have not flinched from introducing them, we do not intend to flinch as they start to have effect, we shall add to them if need be and we intend to see them through.

Question put, That the words proposed to be left out stand part of the Question:—

The House divided: Ayes 325, Noes 259.

Division No. 113.]
AYES
[9.58 p.m.


Agnew, Cmdr. P. G.
Cooper, Sqn. Ldr. Albert
Hare, Rt. Hon. J. H.


Aitken, W. T.
Cordeaux, Lt.-Col. J. K.
Harris, Frederic (Croydon, N. W.)


Allan, R. A. (Paddington, S.)
Corfield, Capt. F. V.
Harris, Reader (Heston)


Alport, C. J. M.
Craddock, Beresford (Spelthorne)
Harrison, A. B. C. (Maldon)


Amery, Julian (Preston, N.)
Crosthwaite-Eyre, Col. O. E.
Harrison, Col. J. H. (Eye)


Amory, Rt. Hn. Heathcoat (Tiverton)
Crouch, R. F.
Harvey, Air Cdre. A. V. (Macclesfd)


Anstruther-Cray, Major W. J.
Crowder, Sir John (Finchley)
Harvey, Ian (Harrow, E.)


Arbuthnot, John
Crowder, Petre (Rulslip—Northwood)
Harvey, Ian (Walthamstow, E.)


Armstrong, C. W.
Cunningham, Knox
Harvie-Watt, Sir George


Ashton, H.
Currie, G. B. H.
Hay, John


Astor, Hon. J. J.
Dance, J. C. G.
Head, Rt. Hon. A. H.


Atkins, H. E.
Davidson, Viscountess
Heald, Rt. Hon. Sir Lionel


Baldock, Lt.-Cmdr. J. M.
D'Avigdor-Goldsmid, Sir Henry
Henderson, John (Cathcart)


Baldwin, A. E.
Deedes, W. F.
Hicks-Beach, Maj. W. W.


Balniel, Lord
Digby, Simon Wingfield
Hill, Rt. Hon. Charles (Luton)


Banks, Col. C.
Dodds-Parker, A. D.
Hill, Mrs. E. (Wythenshawe)


Barber, Anthony
Donaldson, Cmdr. C. E. McA.
Hill, John (S. Norfolk)


Barlow, Sir John
Doughty, C. J. A.
Hinchingbrooke, Viscount


Barter, John
Drayson, G. B.
Hirst, Geoffrey


Baxter, Sir Beverley
du Cann, E. D. L.
Holland-Martin, C. J.


Beamish, Maj. Tufton
Dugdale, Rt. Hn. Sir T. (Richmond)
Hope, Lord John


Bell, Philip (Bolton, E.)
Duncan, Capt. J. A. L.
Hornsby-Smith, Miss M. P.


Bell, Ronald (Bucks, S.)
Duthie, W. S.
Horobin, Sir Ian


Bennett, F. M. (Torquay)
Eccles, Rt. Hon. Sir David
Horsbrugh, Rt. Hon. Dame Florence


Bennett, Dr. Reginald
Eden, Rt. Hn. Sir A. (Warwick&amp;L'm'tn)
Howard, Gerald (Cambridgeshire)


Bevins, J. R. (Toxteth)
Eden, J. B. (Bournemouth, West)
Howard, Hon. Greville (St. Ives)


Bidgood, J. C.
Emmet, Hon. Mrs. Evelyn
Howard, John (Test)


Biggs-Davison, J. A.
Errington, Sir Eric
Hudson, Sir Austin (Lewisham, N.)


Birch, Rt. Hon. Nigel
Erroll, F. J.
Hudson, W. R. A. (Hull, N.)


Bishop, F. P.
Farey-Jones, F. W.
Hughes, Hallett, Vice-Admiral J.


Black, C. W.
Fell, A.
Hughes-Young, M. H. C.


Body, R. F.
Finlay, Graeme
Hulbert, Sir Norman


Boothby, Sir Robert
Fisher, Nigel
Hurd, A. R


Bossom, Sir A. C.
Fleetwood-Hesketh, R. F.
Hutchison, Sir Ian Clark (E'b'gh.W.)


Boyd-Carpenter, Rt. Hon. J. A.
Fletcher.Cooke, C.
Hutchison, Sir James (Scotstoun)


Boyle, Sir Edward
Fort, R.
Hyde, Montgomery


Braithwaite, Sir Albert (Harrow, W.)
Foster, John
Hylton-Foster, Sir H. B. H.


Bromley-Davenport, Lt.-Col. W. H.
Fraser, Hon. Hugh (Stone)
Iremonger, T. L.


Brooke, Rt. Hon. Henry
Freeth, D. K.
Irvine, Bryant Godman (Rye)


Brooman-White, R. C.
Calbraith, Hon. T. G. D.
Jenkins, Robert (Dulwich)


Browne, J. Nixon (Cralgton)
Gammans, Sir David
Jennings, J. C. (Burton)


Bryan, P.
Garner-Evans, E. H.
Jennings, Sir Roland (Hallam)


Buchan-Hepburn, Rt. Hon. P. G. T.
George, J. C. (Pollok)
Johnson, Dr. Donald (Carlisle)


Bullus, Wing Commander E. E.
Gibson-Watt, D.
Johnson, Eric (Blackley)


Burden, F. F. A.
Clover, D.
Johnson, Howard (Kemptown)


Butcher, Sir Herbert.
Godber, J. B.
Jones, Rt. Hon. Aubrey (Hall Green)


Butler, Rt.Hn.R. A. (Saffron Walden)
Gomme-Duncan, Col. Sir Alan
Joseph, Sir Keith


Campbell, Sir David
Gough, C. F. H.
Joynson-Hicks, Hon. Sir Lancelot


Carr. Robert
Gower, H. R.
Kaberry, D.



Grant, W. (Woodside)
Keegan, D.


Cary, Sir Robert
Grant-Ferris, Wg Cdr. R. (Nantwich)
Kerby, Capt. H. B.


Channon, H.
Green, A.
Kerr, H. W.


Chichester-Clark, R.
Cresham Cooke, R.
Kershaw, J. A.


Churchill, Rt. Hon. Sir Winston
Grimston, Sir Robert (Westbury)
Kimball, M.


Clarke, Brig. Terence (Portsmth, W.)
Grosvenor, Lt.-Col. R. G.
Kirk, P. M.


Cole, Norman
Gurden, Harold
Lagden, G. W.


Conant, Maj. Sir Roger
Hall, John (Wycombe)
Lambert, Hon. G.




Lambton, Viscount
Neave, Airey
Spearman, A. C. M.


Lancaster, Col. C. G.
Nicholls, Harmar
Speir, R. M.


Langford-Holt, J. A.
Nioholson, Godfrey (Farnham)
Spence, H. R. (Aberdeen, W.)


Leather, E. H. C.
Nicolson, N. (B'n'm'th, E. &amp; Chr'ch)
Spens, Rt. Hn. Sir P.(Kens'gt'n, S.)


Leaver, J. A.
Nield, Basil (Chester)
Stanley, Capt. Hon. Richard


Leburn, W. G.
Noble, Comdr. A. H. P.
Stevens, Geoffrey


Legge-Bourke, Maj. E. A. H.
Nugent, G. R. H.
Steward, Harold (Stockport, S.)


Legh, Hon. Peter (Petersfield)
Nutting, Rt. Hon. Anthony
Steward, Sir William (Woolwich, W.)


Lennox-Boyd, Rt. Hon. A. T.
Oakshott, H. D.
Stewart, Henderson (Fife, E.)


Lindsay, Hon. James (Devon, N.)
O'Neill, Hn. Phelim (Co. Antrim, N.)
Stoddart-Scott, Col. M.


Lindsay, Martin (Solihull)
Orr, Capt. L. P. S.
Storey, S.


Linstead, Sir H. N.
Orr-Ewing, Charles Ian (Hendon, N.)
Stuart, Rt. Hon. James (Moray)


Llewellyn, D. T.
Orr-Ewing, Sir Ian (Weston-s-Mare)
Summers, G. S. (Aylesbury)


Lloyd, Maj. Sir Guy (Renfrew, E.)
Osborne, C.
Sumner, W. D. M. (Orpington)


Lloyd, Rt. Hon. Selwyn (Wirral)
Page, R. G.
Taylor, William (Bradford, N.)


Lloyd-George, Maj. Rt. Hon. G.
Pannell, N. A. (Kirkdale)
Teeling, W.


Longden, Gilbert
Partridge, E.
Thomas, Leslie (Canterbury)


Low, Rt. Hon. A. R. W.
Peyton, J. W. W.
Thomas, P. J. M. (Conway)


Lucas, P. B. (Brentford &amp; Chiswick)
Pickthorn, K. W. M.
Thompson, Kenneth (Walton)


Lucas-Tooth, Sir Hugh
Pilkington, Capt. R. A.
Thompson, Lt.-Cdr. R. (Croydon, S.)


McAdden, S. J.
Pitman, I. J.
Thorneycroft, Rt. Hon. P.


Macdonald, Sir Peter
Pitt, Miss E. M.
Thornton-Kemsley, C. N.


Mackeson, Brig. Sir Harry
Pott, H. P.
Tiley, A. (Bradford, W.)


McKibbin, A. J.
Powell, J. Enoch
Tilney, John (Wavertree)


Mackie, J. H. (Galloway)
Price, David (Eastleigh)
Touche, Sir Cordon


McLaughlin, Mrs. P.
Price, Henry (Lewisham, W.)
Turner, H. F. L.


Maclay, Rt. Hon. John
Prior-Palmer, Brig. O. L.
Turton, Rt. Hon. R. H.


Maclean, Fitzroy (Lancaster)
Profumo, J. D.
Tweedsmuir, Lady


McLean, Neil (Inverness)
Raikes, Sir Victor
Vane, W. M. F.


Macleod, Rt. Hn. Iain (Enfield, W.)
Ramsden, J. E.
Vaughan-Morgan, J. K.


MacLeod, John (Ross &amp; Cromarty)
Rawlinson, Peter
Vickers, Miss J. H.


Macmillan, Rt. Hn. Harold (Bromley)
Redmayne, M.
Vosper, D. F.


Macpherson, Niall (Dumfries)
Rees-Davies, W. R.
Wakefield, Edward (Derbyshire, W.)


Maddan, Martin
Remnant, Hon. P.
Wakefield, Sir Wavell (St. M'lebone)


Maitland, Cdr. J. F. W. (Horncastle)
Renton, D. L. M.
Walker-Smith, D. C.


Maitland, Hon. Patrick (Lanark)
Ridsdale, J. E.
Wall, Major Patrick


Manningham-Buller, Rt. Hn. Sir R.
Rippon, A. G. F.
Ward, Hon. George (Worcester)


Markham, Major Sir Frank
Roberts, Sir Peter (Heeley)
Ward, Dame Irene (Tynemouth)


Marlowe, A. A. H.
Robertson, Sir David
Waterhouse, Capt. Rt. Hon. C.


Marples, A. E.
Robinson, Sir Roland (Blackpool, S.)
Watkinson, Rt. Hon. Harold


Marshall, Douglas
Robson-Brown, W.
Webbe, Sir H.


Maudling, Rt. Hon. R.
Rodgers, John (Sevenoaks)
Whitelaw, W.S.I.(Penrith &amp; Border)


Mawby, R. L.
Roper, Sir Harold
Williams, Paul (Sunderland, S.)


Maydon, Lt.-Comdr. S. L. C.
Ropner, Col. Sir Leonard
Williams, R. Dudley (Exeter)


Medlicott, Sir Frank
Russell, R. S.
Wills, G. (Bridgwater)


Milligan, Rt. Hon. W. R.
Sandys, Rt. Hon. D.
Wilson, Geoffrey (Truro)


Molson, A. H. E.
Schofield, Lt.-Col. W.
Wood, Hon. R.


Monckton, Rt. Hon. Sir Walter
Scott-Miller, Cmdr. H.
Woollam, John Victor


Moore, Sir Thomas
Sharples, R. C.
Yates, William (The Wrekin)


Morrison, John (Salisbury)
Shepherd, William



Mott-Radclyffe, C. E.
Simon, J. E. S. (Middlesbrough, W.)



Nabarro, G. D. N.
Smyth, Brig. Sir John (Norwood)
TELLERS FOR THE AYES:


Nairn, D. L. S.
Soames, Capt. C.
Mr. Heath and Mr. Studholme.




NOES


Ainsley, J. W.
Brown, Rt. Hon. George (Belper)
Deer, G.


Albu, A. H.
Brown, Thomas (Ince)
de Freitas, Geoffrey


Allaun, Frank (Salford, E.)
Burke, W. A.
Dodds, N. N.


Allen, Arthur (Bosworth)
Burton, Miss F. E.
Dye, S.


Allen, Scholefield (Crewe)
Butler, Herbert (Hackney, C.)
Ede, Rt. Hon. J. C.


Anderson, Frank
Butler, Mrs. Joyce (Wood Green)
Edelman, M.


Awbery, S. S.
Callaghan, L. J.
Edwards, Rt. Hon. John (Brighouse)


Bacon, Miss Alice
Carmichael, J.
Edwards, Rt. Hon. Ness (Caerphilly)


Baird, J.
Castle, Mrs. B. A.
Edwards, Robert (Bilston)


Balfour, A.
Champion, A. J.
Edwards, W. J. (Stepney)


Bartley, P.
Chapman, W. D.
Evans, Albert (Islington, S.W.)


Bellenger, Rt. Hon. F. J.
Chetwynd, G. R.
Evans, Edward (Lowestoft)


Bence, C. R. (Dunbartonshire, E.)
Clunie, J.
Evans, Stanley (Wednesbury)


Benn, Hn. Wedgwood (Bristol, S.E.)
Coldrick, W.
Fernyhough, E.


Benson, G.
Collick, P. H. (Birkenhead)
Fienburgh, W.


Beswick, F.
Collins, V. J.(Shoreditch &amp; Finsbury)
Finch, H. J.


Bevan, Rt. Hon. A. (Ebbw Vale)
Corbel, Mrs. Freda
Fletcher, Eric


Blackburn, F.
Cove, W. G.
Forman, J. C.


Blenkinsop, A.
Craddock, George (Bradford, S.)
Fraser, Thomas (Hamilton)


Blyton, W. R.
Cronin, J. D.
Gaitskell, Rt. Hon. H. T. N.


Boardman, H.
Crossman, R. H. S.
Gibson, C. W.


Bottomley, Rt. Hon. A. G.
Cullen, Mrs. A.
Gordon Walker, Rt. Hon. P. C.


Bowen, E. R. (Cardigan)
Daines, P.
Greenwood, Anthony


Bowles, F. G.
Dalton, Rt. Hon. H.
Grenfell, Rt. Hon. D. R.


Boyd, T. C.
Darling, George (Hillsborough)
Grey, C. F.


Braddock, Mrs. Elizabeth
Davies, Rt.Hon.Clement(Montgomery)
Griffiths, David (Rother Valley)


Brock way, A. F.
Davies, Ernest (Enfield, E.)
Griffiths, Rt. Hon. James (Llanelly)


Broughton, Dr. A. D. D.
Davies, Stephen (Merthyr)
Griffiths, William (Exchange)







Grimond, J.
Mainwaring, W. H.
Skeffington, A. M.


Hale, Leslie
Mallalieu, E. L. (Brigg)
Slater, Mrs. H. (Stoke, N.)


Hall, Rt. Hn. Glenvil (Colne Valley)
Mallalieu, J. P. W. (Huddersfd, E.)
Slater, J. (Sedgefield)


Hamilton, W. W.
Mann, Mrs. Jean
Smith, Ellis (Stoke, S.)


Harrison, J. (Nottingham, N.)
Marquand, Rt, Hon. H. A.
Snow, J. W.


Hastings, S.
Mason, Roy
Sorensen, R. W.


Hayman, F. H.
Mayhew, C. P.
Sparks, J. A.


Healey, Denis
Mellish, R. J.
Steele, T.


Henderson, Rt. Hn. A. (Rwly Regis)
Messer, Sir F.
Stewart, Michael (Fulham)


Herbison, Miss M.
Mitchison, G. R.
Stokes, Rt. Hon. R. R. (Ipswich)


Hewitson, Capt. M.
Monslow, W.
Stones, W. (Consett)


Holman, P.
Moody, A. s.
Strachey, Rt. Hon. J.


Holmes, Horace
Morris, Percy (Swansea, W.)
Strauss, Rt. Hon. George (Vauxhall)


Houghton, Douglas
Morrison, Rt. Hn. Hertoert (Lewis'm, S.)
Stross, Dr. Barnett (Stoke-on-Trent, C.)


Howell, Charles (Perry Barr)
Mort, D. L.
Summerskill, Rt. Hon. E.


Howell, Denis (All Saints)
Moss, R.
Swingler, S. T.


Hoy, J. H.
Moyle, A.
Sylvester, G. O.


Hughes, Emrys (S. Ayrshire)
Mulley, F. W.
Taylor, Bernard (Mansfield)


Hughes, Hector (Aberdeen, N.)
Neal, Harold (Bolsover)
Taylor, John (West Lothian)


Hunter, A. E.
O'Brien, Sir Thomas
Thomas, George (Cardiff)


Hynd, H. (Accrington)
Oliver, G. H.
Thomas, Iorwerth (Rhondda, W.)


Hynd, J. B. (Attercliffe)
Oram, A. E.
Thomson, George (Dundee, E.)


Irvine, A. J. (Edge Hill)
Orbach, M.
Thornton, E.


Irving, S. (Dartford)
Oswald, T.
Timmons, J.


Isaacs, Rt. Hon. G. A.
Owen, W. J.
Turner-Samuels, M.


Janner, B.
Padley, W. E.
Ungoed-Thomas, Sir Lynn


Jay, Rt. Hon. D. P. T.
Paling, Rt. Hon. W. (Dearne Valley)
Usborne, H. C.


Jeger, George (Goole)
Paling, Will T. (Dewsbury)
Wade, D. W.


Jeger, Mrs. Lena (Holbn &amp; St.Pncs. S.)
Palmer, A. M. F.
Warbey, W. N.


Jenkins, Roy (Stechford)
Pannell, Charles (Leeds, W.)
Watkins, T. E.


Johnson, James (Rugby)
Pargiter, G. A.
Weitzman, D.


Johnston, Douglas (Paisley)
Parker, J.
Wells, Percy (Faversham)


Jones, Rt. Hn. A. Creech (Wakefield)
Parkin, B. T.
Wells, William (Walsall, N.)


Jones, David (The Hartlepools)
Paton, J.
West, D. G.


Jones, Elwyn (W. Ham, S.)
Peart, T. F.
Wheeldon, W. E.


Jones, Jack (Rotherham)
Popplewell, E.
White, Mrs. Eirene (E. Flint)


Jones, J. Idwal (Wrexham)
Price, J. T. (Westhoughton)
White, Henry (Derbyshire, N. E.)


Jones, T. W. (Merioneth)
Price, Philips (Gloucestershire, W.)
Wigg, George


Kenyon, C.
Probert, A. R.
Wilcock, Group Capt. C. A. B.


Key, Rt. Hon. C. W.
Proctor, W. T.
Wilkins, W. A.


King, Dr. H. M.
Pryde, D. J.
Willey, Frederick


Lawson, G. M.
Pursey, Cmdr. H.
Williams, David (Neath)


Ledger, R. J.
Randall, H. E.
Williams, Rev. Llywelyn (Ab'tillery)


Lee, Frederick (Newton)
Rankin, John
Williams, Ronald (Wigan)


Lever, Harold (Cheetham)
Reeves, J.
Williams, Ht. Hon. T. (Don Valley)


Lever, Leslie (Ardwick)
Reid, William
Williams, W. R. (Openshaw)


Lewis, Arthur
Rhodes, H.
Williams, W. T. (Barons Court)


Lindgren, G. S.
Robens, Rt. Hon. A.
Willis, Eustace (Edinburgh, E.)


Lipton, Lt.-Col. M.
Roberts, Albert (Normanton)
Wilson, Rt. Hon. Harold (Huyton)


Logan, D. G.
Roberts, Goronwy (Caernarvon)
Winterbottom, Richard


Mabon, Dr. J. Dickson
Robinson, Kenneth (St. Pancras, N.)
Woodburn, Rt. Hon. A.


MacColl, J. E.
Rogers, George (Kensington, N.)
Woof, R. E.


McGhee, H. G.
Ross, William
Yates, V. (Ladywood)


McGovern, J.
Royle, C.
Younger, Rt. Hon. K.


McInnes, J.
Shinwell, Rt. Hon. E.
Zilliacus, K.


McKay, John (Wallsend)
Short, E. W.



MeLeavy, Frank
Shurmer, P. L. E.



Macmillan, M. K. (Western Isles)
Silverman, Julius (Aston)
TELLERS FOR THE NOES:


MacPherson, Malcolm (Stirling)
Silverman, Sydney (Nelson)
Mr. Bowden and Mr. Pearson.


Mahon, S.
Simmons, C. J. (Brierley Hill)

Main question put:—

The House divided: Ayes 325, Noes 258.

Division No. 114.]
AYES
[10.10 p.m.


Agnew, Cmdr. P. G.
Barlow, Sir John
Boyd-Carpenter, Rt. Hon. J. A.


Aitken, W. T.
Barter, John
Boyle, Sir Edward


Allan, R. A. (Paddington, S.)
Baxter, Sir Beverley
Braithwaite, Sir Albert (Harrow, W.)


Alport, C. J. M.
Beamish, Maj. Tufton
Bromley-Davenport, Lt.-Col. W. H.


Amery, Julian (Preston, N.)
Bell, Philip (Bolton, E.)
Brooke, Rt. Hon. Henry


Amory, Rt. Hn. Heathcoat (Tiverton)
Bell, Ronald (Bucks, S.)
Brooman-White, R. C.


Anstruther-Gray, Major W. J.
Bennett, F. M. (Torquay)
Browne, J. Nixon (Craigton)


Arbuthnot, John
Bennett, Dr. Reginald
Bryan, P.


Armstrong, C. W.
Bevins, J. R. (Toxteth)
Buchan-Hepburn, Rt. Hon. P. G. T.


Ashton, H.
Bidgood, J. C.
Bullus, Wing Commander E. E.


Astor, Hon. J. J.
Biggs-Davison, J. A.
Burden, F. F. A.


Atkins, H. E.
Birch, Rt. Hon. Nigel
Butcher, Sir Herbert


Baldock, Lt.-Cmdr. J. M.
Bishop, F. P.
Butler, Rt. Hon. R. A. (Saffron Walden)


Baldwin, A. E.
Black, C. W.
Campbell, Sir David


Balniel, Lord
Body, R. F.
Carr, Robert


Banks, Col. C.
Boothby, Sir Robert
Cary, Sir Robert


Barber, Anthony
Bossom, Sir A. C.
Channon, H.




Chichester-Clark, R,
Horsbrugh, Rt. Hon. Dame Florence
Mott-Radclyffe, C. E.


Churchill, Rt. Hon. Sir Winston
Howard, Gerald (Cambridgeshire)
Nabarro, G. D. N.


Clarke, Brig. Terence (Portsmth, W.)
Howard, Hon. Greville (St. Ives)
Nairn, D. L. S.


Cole, Norman
Howard, John (Test)
Neave, Airey


Conant, Maj. Sir Roger
Hudson, Sir Austin (Lewisham, N.)
Nicholls, Harmar


Cooper, Sqn. Ldr. Albert
Hudson, W. R. A. (Hull, N.)
Nicholson, Godfrey (Farnham)


Cordeaux, Lt.-Col. J. K.
Hughes, Hallett, Vice-Admiral J.
Nicolson, N. (B'n'm'th, E. &amp; Chr'oh)


Corfield, Capt. F. V.
Hughes-Young, M. H. C.
Nield, Basil (Chester)


Craddock, Barestford (Spelthorne)
Hulbert, Sir Norman
Noble, Comdr. A. H. P.


Crosthwaite-Eyre, Col. O. E.
Hurd, A. R.
Nugent, G. R. H.


Crouch, R. F.
Hutchison, Sir Ian Clark(E'b'gh, W.)
Nutting, Rt. Hon. Anthony


Crowder, Sir John (Finchley)
Hutchison, Sir James (Scotstoun)
Oakshott, H. D.


Crowder, Petre (Ruislip—Northwood)
Hyde, Montgomery
O'Neill, Hn. Phelim (Co. Antrim, N.)


Cunningham, Knox
Hylton-Foster, Sir H. B. H.
Ormsby-Gore, Hon. W. D.


Currie, G. B. H.
Iremonger, T. L.
Orr, Capt. L. P. S.


Dance, J. C. G.
Irvine, Bryant Godman (Rye)
Orr-Ewing, Charles Ian (Hendon, N.)


Davidson, Viscountess
Jenkins, Robert (Dulwich)
Orr-Ewing, Sir Ian (Weston-S-Mare)


D'Avigdor-Goldsmid, Sir Henry
Jennings, J. C. (Burton)
Osborne, C.


Deedes, W. F.
Jennings, Sir Roland (Hallam)
Page, R. G.


Digby, Simon Wingfield
Johnson, Dr. Donald (Carlisle)
Pannell, N. A. (Kirkdale)


Dodds-Parker, A. D.
Johnson, Eric (Blackley)
Partridge, E


Donaldson, Cmdr. C. E. McA.
Johnson, Howard (Kemptown)
Peyton, J. W. W.


Doughty, C. J. A.
Jones, Hon. Aubrey (Hall Green)
Pickthorn, K. W. M.


Drayson, G. B.
Joseph, Sir Keith
Pilkingtori, Capt. R. A.


du Cann, E. D. L.
Joynson-Hicks, Hon. Sir Lancelot
Pitman, I. J.


Dugdale, Rt. Hn. Sir T. (Richmond)
Kaberry, D.
Pitt, Miss E. M.


Duncan, Capt. J. A. L.
Keegan, D.
Pott, H. P.


Duthie, W. S.
Kerby, Capt. H. B.
Powell, J. Enoch


Eccles, Rt. Hon. Sir David
Kerr, H. W.
Price, David (Eastleigh)


Eden, Rt. Hn. SirA. (Warwick&amp;L'm'tn)
Kershaw, J. A.
Price, Henry (Lewisham, W.)


Eden, J. B. (Bournemouth, West)
Kimball, M.
Prior-Palmer, Brig. O. L.


Emmet, Hon. Mrs. Evelyn
Kirk, P. M.
Profumo, J. D.


Errington, Sir Eric
Lagden, G. W.
Raikes, Sir Victor


Erroll, F. J.
Lambert, Hon. G.
Ramsden, J. E.


Farey-Jones, F. W.
Lambton, Viscount
Rawlinson, Peter


Fell, A.
Lancaster, Col. C. G.
Redmayne, M.


Finlay, Graeme
Langford-Holt, J. A.
Remnant, Hon. P.


Fisher, Nigel
Leather, E. H. C.
Renton, D. L. M.


Fleetwood-Hesketh, R. F.
Leavey, J. A.
Ridsdale, J. E.


Fletcher-Cooke, C.
Leburn, W. G.
Rippon, A. G. F.


Fort, R.
Legge-Bourke, Maj. E. A. H.
Roberts, Sir Peter (Heeley)


Foster, John
Legh, Hon. Peter (Petersfield)
Robertson, Sir David


Fraser, Hon. Hugh (Stone)
Lennox-Boyd, Rt. Hon. A. T.
Robinson, Sir Roland (Blackpool, S.)


Freeth, D. K.
Lindsay, Hon. James (Devon, N.)
Robson-Brown, W.


Galbraith, Hon. T. G. D.
Lindsay, Martin (Solihull)
Rodgers, John (Sevenoaks)


Gammans, Sir David
Linstead, Sir H. N.
Roper, Sir Harold


Garner-Evans, E. H.
Llewellyn, D. T.
Ropner, Col. Sir Leonard


George, J. C. (Pollok)
Lloyd, Maj. Sir Guy (Renfrew, E.)
Russell, R. S.


Gibson-Watt, D.
Lloyd, Rt. Hon. Selwyn (Wirral)
Sandys, Rt. Hon. D.


Glover, D.
Lloyd-George, Maj. Rt. Hon. G.
Schofield, Lt.-Col. W.


Godber, J. B.
Longden, Gilbert
Scott-Miller, Cmdr. R.


Gomme-Duncan, Col. Sir Alan
Low, Rt. Hon. A. R. W.
Sharples, R. C.


Gough, C. F. H.
Lucas, P. B. (Brentford &amp; Chiswick)
Shepherd, William


Gower, H. R.
Lucas-Tooth, Sir Hugh
Simon, J. E. S. (Middlesbrough, W.)


Grant, W. (Woodside)
McAdden, S. J.
Smyth, Brig. Sir John (Norwood)


Grant-Ferris, Wg. Cdr. R. (Nantwich)
Macdonald, Sir Peter
Soames, Capt. C.


Green, A.
Mackeson, Brig. Sir Harry
Spearman, A. C. M.


Gresham Cooke, R.
McKibbin, A. J.
Speir, R. M.


Grimston, Sir Robert (Westbury)
Mackie, J. H. (Galloway)
Spence, H. R. (Aberdeen, W.)


Grosvenor, Lt.-Col. R. G.
McLaughlin, Mrs. P.
Spens, Rt. Hn. Sir P. (Kens'gt'n, S.)


Gurden, Harold
Maclay, Rt. Hon. John
Stanley, Capt. Hon. Richard


Hall, John (Wycombe)
Maclean, Fitzroy (Lancaster)
Stevens, Geoffrey


Hare, Rt. Hon. J. H.
McLean, Neil (Inverness)
Steward, Harold (Stockport, S.)


Harris, Frederic (Croydon, N. W.)
Madeod, Rt. Hn. Iain (Enfield, W.)
Steward, Sir William (Woolwich, W.)


Harris, Reader (Heston)
MacLeod, John (Ross &amp; Cromarty)
Stewart, Henderson (Fife, E.)


Harrison, A. B. C. (Maldon)
Macmillan, Rt. Hn. Harold (Bromley)
Stoddart-Scott, Col. M.


Harrison, Col. J. H. (Eye)
Macpherson, Niall (Dumfries)
Storey, S.


Harvey, Air Cdre. A. V. (Macclesfd)
Maddan, Martin
Stuart, Rt. Hon. James (Moray)


Harvey, Ian (Harrow, E.)
Maitland, Cdr. J. F. W. (Horncastle)
Summers, G. S. (Aylesbury)


Harvey, John (Walthamstow, E.)
Maitland, Hon. Patrick (Lanark)
Sumner, W. D. M. (Orpington)


Harvie-Watt Sir George
Manningham-Buller, Rt. Hn. Sir R.
Taylor, William (Bradford, N.)


Hay, John
Markham, Major Sir Frank
Teeling, W.


Head, Rt. Hon. A. H.
Marlowe, A. A. H.
Thomas, Leslie (Canterbury)


Heald, Rt. Hon. Sir Lionel
Marples, A. E.
Thomas, P. J. M. (Conway)


Henderson, John (Cathcart)
Marshall, Douglas
Thompson, Kenneth (Walton)


Hicks-Beach, Maj. W. W.
Maudling, Rt. Hon. R.
Thompson, Lt.-Cdr. R.(Croydon, S.)


Hill, Rt. Hon. Charles (Luton)

Thorneycroft, Rt. Hon. P.


Hill, Mrs. E. (Wythenshawe)
Mawby, R. L.
Thornton-Kemsley, C. N.


Hill, John (S. Norfolk)
Maydon, Lt.-Comdr. S. L. C
Tiley, A. (Bradford, W.)


Hinchingbrooke, Viscount
Medlicott, Sir Frank
Tilney, John (Wavertree)


Hirst, Geoffrey
Milligan, Rt. Hon. W. R.



Holland-Martin, C. J.
Molson, A. H. E.
Touche, Sir Gordon


Hope, Lord John
Monckton, Rt. Hon. Sir Walter
Turner, H. F. L.


Hornsby-Smith, Miss M. p.
Moore, Sir Thomas
Turton, Rt. Hon. R. H.


Horobin, Sir Ian
Morrison, John (Salisbury)
Tweedsmuir, Lady







Vane, W. M. F.
Ward, Hon. George (Worcester)
Wills, G. (Bridgwater)


Vaughan-Morgan, J. K.
Ward, Dame Irene (Tynemouth)
Wilson, Geoffrey (Truro)


Vickers, Miss J. H.
Waterhouse, Capt. Rt. Hon. C.
Wood, Hon. R.


Vosper, D. F.
Watkinson, Rt. Hon. Harold
Woollam, John Victor


Wakefield, Edward (Derbyshire, W.)
Webbe, Sir H.
Yates, William (The Wrekin)


Wakefield, Sir Wavell (St. M'lebone)
Whitelaw, W. S. I. (Penrith &amp; Border)



Walker-Smith, D. C.
Williams, Paul (Sunderland, S.)
TELLERS FOR THE AYES:


Wall, Major Patrick
Williams, R. Dudley (Exeter)
Mr. Heath and Mr. Studholme.




NOES


Ainsley, J. W.
Forman, J. C.
Mallalieu, J. P. W. (Huddersfd, E.)


Albu, A. H.
Fraser, Thomas (Hamilton)
Mann, Mrs. Jean


Allaun, Frank (Salford, E.)
Gaitskell, Rt. Hon. H. T. N.
Marquand, Rt. Hon. H. A.


Allen, Arthur (Bosworth)
Gibson, C. W.
Mason, Roy


Allen, Scholefield (Crewe)
Gordon Walker, Rt. Hon. P. C.
Mayhew, C. P.


Anderson, Frank
Greenwood, Anthony
Mellish, R. J.


Awbery, S. S.
Grenfell, Rt. Hon. D. R.
Messer, Sir F.


Bacon, Miss Alice
Grey, C. F.
Mitchison, C. R.


Baird, J.
Griffiths, David (Rother Valley)
Monslow, W.


Balfour, A.
Griffiths, Rt. Hon. James (Llanelly)
Moody, A. S.


Bartley, P.
Griffiths, William (Exchange)
Morris, Percy (Swansea, W.)


Bellenger, Rt. Hon. F. J.
Grimond, J.
Morrison, Rt. Hn. Herbert (Lewis'm, S)


Bence, C. R. (Dunbartonshire, E.)
Hale, Leslie
Mort, D. L.


Benn, Hn. Wedgwood (Bristol, S. E.)
>Hall, Rt. Hn. Glenvil (Colne Valley)
Moss, R.


Benson, G.
Hamilton, W. W.
Moyle, A.


Beswick, F.
Harrison, J. (Nottingham, N.)
Mulley, F. W.


Bevan, Rt. Hon. A. (Ebbw Vale)
Hastings, S.
Neal, Harold (Bolsover)


Blackburn, F.
Hayman, F. H.
O'Brien, Sir Thomas


Blenkinsop, A.
Healey, Denis
Oliver, C. H.


Blyton, W. R.
Henderson, Rt. Hn. A. (Rwly Regis)
Oram, A. E.


Boardman, H.
Herbison, Miss M.
Orbach, M.


Bottomley, Rt. Hon. A. G.
Hewitson, Capt. M.
Oswald, T.


Bowen, E. R. (Cardigan)
Holman, P.
Owen, W. J.


Bowles, F. G.
Holmes, Horace
Padley, W. E.


Boyd, T. C.
Houghton, Douglas
Paling, Rt. Hon. W. (Dearne Valley>


Braddock, Mrs. Elizabeth
Howell, Charles (Perry Barr)
Paling, Will T. (Dewsbury)


Brookway, A. F.
Howell, Denis (All Saints)
Palmer, A. M. F.


Broughton, Dr. A. D. D.
Hoy, J. H.
Panned, Charles (Leeds, W.)


Brown, Rt. Hon. George (Belper)
Hughes, Emrys (S. Ayrshire)
Pargiter, G. A.


Brown, Thomas (Ince)
Hughes, Hector (Aberdeen, N.)
Parker, J.


Burke, W. A.
Hunter, A. E.
Parkin, B. T.


Burton, Miss F. E.
Hynd, H. (Accrington)
Paton, J.


Butler, Herbert (Hackney, C.)
Hynd, J. B. (Attercliffe)
Peart, T. F.


Butler, Mrs. Joyce (Wood Green)
Irvine, A. J. (Edge Hill)
Popplewell, E.


Callaghan, L. J,
Irving, S. (Dartford)
Price, J. T. (Westhoughton)


Carmichael, J.
Isaacs, Rt. Hon. G. A.
Price, Philips (Gloucestershire, W.)


Castle, Mrs. B. A.
Janner, B.
Probert, A. R.


Champion, A. J.
Jay, Rt. Hon. D. P. T.
Proctor, W. T.


Chapman, W. D.
Jeger, George (Goole)
Pryde, D. J.


Chetwynd, G. R.
Jeger, Mrs. Lena (Holbn &amp; St. Pncs, S.)
Pursey, Cmdr. H.


Clunie, J.
Jenkins, Roy (Stechford)
Randall, H. E.


Coldrick, W.
Johnson, James (Rugby)
Rankin, John


Collick, P. H. (Birkenhead)
Johnston, Douglas (Paisley)
Reeves, J.


Collins, V. J.(Shoreditch &amp; Finsbury)
Jones, Rt. Hon. A. Creech(Wakefield)
Reid, William


Corbet, Mrs. Freda
Jones, David (The Hartlepools)
Rhodes, H.


Cove, W. G.
Jones, Elwyn (W. Ham, S.)
Robens, Rt. Hon. A.


Craddock, George (Bradford, S.)
Jones, Jack (Rotherham)
Roberts, Albert (Normanton)


Cronin, J. D
Jones, J. Idwal (Wrexham)
Roberts, Coronwy (Caernarvon)


Crossman, R. H. S.
Jones, T. W. (Merioneth)
Robinson, Kenneth (St. Pancras, N.)


Cullen, Mrs. A.
Kenyon, C.
Rogers, George (Kensington, N.)


Daines, P.
Key, Rt. Hon. C. W.
Ross, William


Dalton, Rt. Hon. H.
King, Dr. H. M.
Royle, C.


Darling, George (Hillsborough)
Lawson, G. M.
Shinwell, Rt. Hon. E.


Davies, Rt. Hon. Clement (Montgomery)
Ledger, R. J.
Short, E. W.


Davies, Ernest (Enfield, E.)
Lee, Frederick (Newton)
Shurmer, P. L. E.


Davies, Stephen (Merthyr)
Lever, Harold (Cheetham)
Silverman, Julius (Aston)


 Deer, G.
Lever, Leslie (Ardwick)
Silverman, Sydney (Nelson)


de Freitas, Geoffrey
Lewis, Arthur
Simmons, C. J. (Brierley Hill)


Dodds, N. N.
Lindgren, G. S.
Skeffington, A. M.


Dye, S.
Lipton, Lt.-Col. M.
Slater, Mrs. H. (Stoke, N.)


Ede, Rt. Hon. J. C.
Logan, D. G.
Slater, J. (Sedgefield)


Edelman, M.
Mabon, Dr. J. Dickson
Smith, Ellis (Stoke, S.)


Edwards, Rt. Hon. John (Brighouse)
MacColl, J. E.
Snow, J. W.


Edwards, Rt. Hon. Ness (Caerphilly)
McGhee, H. G.
Sorensen, R, W.


Edwards, Robert (Bilston)
McGovern, J.
Sparks, J. A.


Edwards, W. J. (Stepney)
McInnes, J,
Steele, T.


Evans, Albert (Islington, S.W.)
McKay, John (Wallsend)
Stewart, Michael (Fulham)


Evans, Edward (Lowestoft)
McLeavy, Frank
Stokes, Rt. Hon. R. R. (Ipswich)


Evans, Stanley (Wednesbury)
MacMillan, M. K. (Western Isles)
Stones, W. (Consett)


Fernyhough, E.
MacPherson, Malcolm (Stirling)
Strachey, Rt. Hon. J,


Fienburgh, W.
Mabon, S.
Strauss, Rt. Hon. George (Vauxhall)


Finch, H. J.
Mainwaring, W. H.
Stross, Dr. Barnett (Stoke-on-Trent, C)


Fletcher, Eric
Mallalieu, E. L. (Brigg)
Summerskill, Rt. Hon. E.







Swingler, S. T.
Watkins, T. E.
Williams, Rt. Hon. T. (Don Valley)


Sylvester, G. O.
Weitzman, D.
Williams, W. R. (Openshaw)


Taylor, Bernard (Mansfield)
Wells, William (Walsall, N.)
Williams, W. T. (Barons Court)


Taylor, John (West Lothian)
West, D. G.
Willis, E. G.


Thomas, George (Cardiff)
Wheeldon, W. E.
Wilson, Rt. Hon. Harold (Huyton)


Thomas, Iorwerth (Rhondda, W.)
White, Mrs. Eirene (E. Flint)
Winterbottom, Richard


Thomson, George (Dundee, E.)
White, Henry (Derbyshire, N. E.)
Woodburn, Rt. Hon. A.


Thornton, E.
Wigg, George
Woof, R. E.


Timmons, J.
Wilcock, Group Capt. C. A. B.
Yates, V. (Ladywood)


Turner-Samuels, M.
Wilkins, W. A.
Younger, Rt. Hon. K.


Ungoed-Thomas, Sir Lynn
Willey, Frederick
Zilliacus, K.


Usborne, H. C.
Williams, David (Neath)



Wade, D. W.
Williams, Rev. Llywelyn (Ab'tillery)
TELLERS FOR THE NOES:


Warbey, W. N.
Williams, Ronald (Wigan)
Mr. Bowden and Mr. Pearson.

Resolved,
That this House affirms its confidence in the measures announced by Her Majesty's Government to deal with the economic situation.

Orders of the Day — HOUSING (DAMAGE BY FROST)

Motion made, and Question proposed, That this House do now adjourn.—[Mr. E. Wakefield.]

10.21 p.m.

Mr. David Llewellyn: Two years ago I asked for a committee to be appointed to investigate and report on the methods of minimising the effect of very cold weather on houses in general and plumbing in particular. In rejecting this demand for a committee, the Minister replied that he was advised that the recommendations in existing housing manuals and technical appendices provided adequate protection if properly applied; but the Minister did order a sample survey covering 200,000 post-war houses.
It was found as a result of this survey, as might be expected, that post-war houses fared better than pre-war, that in England 8·5 per cent. of post-war houses suffered damage to their water systems and that elsewhere, particularly in Wales, the figure was very much higher. This information was sent out to housing authorities in Circular 34/54, which drew attention to the housing manual and technical appendices; to model water bye-laws and, in particular, to paragraph 20, which laid down that every water fitting where it was liable to damage by frost or other causes, should be reasonably protected; and in paragraph 5, it stressed that much more needed to be done.
It ended with an exhortation to all concerned, which, to put it mildly, has been insufficiently observed. The Minister also declined to publish full details of the survey. He was not clear what purpose would be served. One purpose which would have been served would have been

to see the comparative frost resistance of different types of houses. I have this morning heard from a rural district council in Wales that prefabricated concrete houses, where the rising main is fixed direct to an external wall, are notoriously unsatisfactory in this respect.
The Minister's reticence was in part redeemed by a survey that was undertaken in 1954 of the L.C.C. estate at Oxhey, made by the Health Department of the London School of Hygiene and Medicine. A sample of 1,018 houses was taken, and of those 98 had burst pipes directly caused by frost and there were 156 in all. Four conclusions were drawn by the surveyors in this respect. First, that at least 624 burst pipes were caused altogether in Oxhey and that each burst cost 25s. to repair. Secondly, that the construction and quality of the plumbing was good. Thirdly, it stresses the vulnerability of bathroom pipes near external walls, especially where the bathroom faced north or north-east. Fourthly, it declared that the tenants were much to blame. Only two tenants in these 98 houses had lagged their pipes. Only one tenant had used a heater in his bathroom, and 23 tenants did not know where the stop-cock was before the burst. Even after the burst seven did nothing.
However lamentable this lack of self-help may be, it is arguable that the tenants are, in fact, being blamed for what is a prime responsibility of the local authority. I suggest that in the long run it would be far cheaper for local authorities to lag or box pipes in the first place. In my view, local authorities should either lag or box pipes for the tenant before he moves in, or they should make the tenant responsible for the lagging himself. In either case they should make him pay all costs of bursts due to his own neglect. I recognise that there is a special problem in so far as the protection of bathroom pipes is concerned, and this presents a


separate problem. But here again it would be cheaper in the long run to provide the tenants with some sort of heating.
With regard to private houses, and all questions of model water byelaws apart, it is the duty of architects and builders to make it clear to a purchaser whether or not the water system which is intended for the house is frostproof. To point out afterwards that to make the system frost-proof would have cost £50 or so more is adding insult to injury.
Another feature of the Oxhey survey was praise for the standard of plumbing, yet often it is the plumber who, if I may use the term in this connection, "carries the can" for the architect, the local authority or the private builder. There is a significant passage in the memorandum prepared by the engineer and surveyor to the rural district council to which I am referring, which states:
Provided houses are reasonably well built with light weight circular internal wall linings to the external walls and with partition walls of a similar character, and with rising mains carried up on internal walls there should be little difficulty in respect to damage from frost in modern houses, subject however to the houses being kept reasonably warm by the tenants. It has been found in many cases that bursts have occurred when the dwelling is not occupied during the day due to the fact that the wife is away at work and the house is therefore virtually without heat for long periods.
This factor was also stressed by the Oxhey Report, and it suggests that water byelaws do not sufficiently provide for this feature in our national life.
I do not think that any hon. Member would seriously quarrel about the tremendous amount of frost damage which has been suffered this February and in February, 1954, and, indeed, whenever there is a really hard frost in this country. I have taken figures at random from the Manchester Guardian, from editions in early February. In London, the Metropolitan Water Board estimated the number of bursts as "hundreds of thousands." In Mid and South-East Cheshire there were between 10,000 and 22,000. In Bristol over 30,000 houses were damaged with 5,000 burst pipes in council houses, and the water consumption had gone up by 25 per cent. In Hereford, 3,000 of the tenants of the 3,500 council houses in the city made emergency calls to plumbers. In Liverpool, the rate of consumption of

water has risen a third above the normal and more than 30 million gallons of water have been lost, the highest wastage in the city's history. There is the same story of wasted water from Wirrall and other places throughout the country. It has been particularly severe in the Rhymney Valley in Wales. The sorry story is of universal application. Also, I need not stress the tremendous damage that results to property from these bursts.
In the light of this evidence, which can be infinitely multiplied, is the Minister still satisfied with the provisions of the Housing Acts and the technical provisions? Also, is he satisfied with the level of co-operation among the parties concerned, and if not—I imagine that is the case—what, apart from exhortation. which has been proved futile, does he propose to do?
I have no time tonight to go into related subjects for some of which my hon. Friend has only limited responsibility, such as defective heating systems in trains, defective layouts of gas pipes, and the injury which results to public health and the loss of production which can be directly attributed to frost damage; but, clearly, the cost of all this to the country is enormous. At Oxhey, in 1954, each burst, at the price then prevailing, cost 25s. to repair. I do not think it ig an over-statement to suggest that in the first three months of this year the damage will run into tens of millions of pounds.
Much of this waste is needless. For one thing, the Continent and the Commonwealth appear to be much more successful than we are in avoiding it. The use of alternative methods and materials would certainly help. There are two interesting experiments which have been carried out with polythene piping for cold water pipes. In Oldham, 300 houses with outside sanitation have been fitted with such pipes, and there has not been a burst since. I believe the same applies to an L.C.C. experiment at St. Paul's Cray.
There is also the question of lagging. If only people would lag their pipes with the system as it is and if only heating of some sort were provided in bathrooms. needless wastage would be avoided.
Two years ago I asked for a committee of inquiry. During the past two years the problem has grown more


serious and it appears to have been equally neglected. I ask again for an inquiry into the adequacy of our own techniques, the hazards of our climate, Commonwealth and Continental experience, the state of our research with special reference to the use of alternative materials, the revision and enforcement of water and other byelaws, and the need for further education of architects, builders, plumbers, local authorities and the general public in their responsibilities.
With our country literally fighting for its economic life, all needless waste is inexcusable. I do not feel that exhortation is enough. I believe that, without a real lead by the Minister and the Government, this annual exhibition of national incompetence and irresponsibility will continue, to our cost, discomfort and disgrace.

10.34 p.m.

The Parliamentary Secretary to the Ministry of Housing and Local Government (Mr. J. Enoch Powell): The subject which my hon. Friend the Member for Cardiff, North (Mr. Llewellyn) has put before the House resolves itself into two separate parts, one relating to the structure and protection of water fittings in domestic dwellings, and the other to the behaviour of the occupants of the houses. It will be convenient if I deal 'ith those two aspects in succession.
The field of structure is dominated by the water byelaws made by the water undertakers in the areas concerned. In their old form and in their new form since 1954 the model byelaws fully cover the requirements of structure and protection. The old byelaw reads:
Every water fitting laid or fixed in such a position whether inside or outside a building as to render it liable to damage by frost shall be reasonably protected from such damage.
This was clarified in the new model byelaw introduced in 1954, which runs:
So far as is reasonably practicable every water fitting inside a building shall be so placed as not to render it liable to damage by frost. Where a water fitting whether inside or outside a building is so placed as to render it liable to damage by frost it shall be reasonably protected from such damage.
These are the perfectly clear and adequate requirements which the water byelaws place upon the user of a water supply. The old byelaws are gradually being superseded by the new. I am advised that already about 60 per cent. of the

water undertakers have adopted the new model byelaws.
In complying with these byelaws the local authorities and others have the guidance of the Housing Manual, as it was elaborated by the Circular of 1954. Taken together, these codes represent a standard of practice which, if it is complied with and enforced, ought to be as satisfactory as any code of practice relating to structure and protection can be. My hon. Friend mentioned the newer materials that are being experimented with and that are coming into use. There is nothing in the byelaws to inhibit such experiments and progress.
The water undertakers who make these byelaws are greatly interested in avoidance of damage by frost. Waste of water is one of the most undesirable and expensive results of frost damage. It is the interest and responsibility of water undertakers to prevent and avoid it. In the enforcement of the byelaws they have, to all appearances, adequate powers. They have powers of entry and inspection, and the penalties attaching to infraction of the byelaws are by no means insignificant: a fine of £20 and a fine of £5 per day for a continuing offence can be imposed. Yet when we look at the facts of recent weeks we must conclude that non-compliance with the byelaws is extremely widespread. We are faced with the further fact, even more surprising, that there is scarcely any record of prosecution for non-compliance. The obligations exist and so do the power and the means of enforcing them; but enforcement lags behind.
That is the reason why my right hon. Friend this afternoon told the House that he proposed to consult the water undertakers as to what more effective methods can be adopted to ensure better observance of the byelaws. If these existing byelaws can be reasonably observed, a great deal of the problem which we are discussing will have been solved. I would suggest to my hon. Friend that there would be no advantage, in this respect at any rate, in the establishment of a committee, that it is the responsibility of the water undertakers to ensure that their byelaws are complied with, and that we shall get earlier results by the direct investigations with the undertakers to which my hon. Friend referred.
I now turn to the other side of this matter, the practices adopted by occupiers.


For I think it is generally accepted that, however completely the byelaws are complied with, nevertheless, if a house is unoccupied, or if it is insufficiently warmed, damage from frost cannot be avoided. Therefore the occupier must play his part by taking the necessary precautions.
What those precautions are will vary according to the water system of an individual house. For example, drainage of whole or part of the system may be practicable or it may not. The plumbing system may be such as to render draining easy or difficult. It may be a question of ensuring a little, but constant heat, either in an attic or in an outdoor lavatory. There are a wide variety of simple measures which, if taken by the occupiers of houses, would close the gap by which satisfactory structure and protection fall short of giving complete immunity from frost damage.
Who are the parties who are interested in securing a proper standard of practice by the house occupier? I suggest that there is always someone who must be pecuniarily interested in this. There is either the local authority in the case of a local authority house, the landlord in the case of a rented house, or the owner-occupier where people own their own houses. So there is always someone who has a direct pecuniary interest in taking the sensible precautions on top of the structural and protective measures already called for by the byelaws.
It is not so easy to say how we can secure a general and improving application of these reasonable precautions. Many local authorities already circularise their tenants, drawing attention to the simple steps which they ought to take; and my right hon. Friend is considering whether to issue a leaflet which would be available to local authorities as well as to private occupiers, or some form of further advice to local authorities on this subject.
There is no doubt, however, that by a combination of compliance with the byelaws and observance of comparatively simple precautions, the solution can be found. My hon. Friend will be interested to hear that in the new town of Cwmbran, in South Wales, only 2 per cent. of the 1,600 houses were affected in the recent cold weather. In fact, Cwmbran put up a record and meritorious "low" in this matter. flow was it done? It was done by structural measures, by account being taken of the frost danger in the planning and construction of the houses, and also by instruction to tenants upon the precautions which they could take. It is, therefore, by no means impracticable virtually to eliminate frost damage, if the builders—the providers of the houses—and the occupiers observe the byelaws—as they are, indeed, bound to—and if the occupiers apply the simple precautions of which it is not difficult to obtain the necessary information.
I feel that this is one of those subjects which it is easy to analyse but difficult to deal with completely in a measurable span of time. I think we have to attack it on these two fronts. We have to find out why byelaws satisfactory in themselves are more honoured in the breach than the observance; and we have to secure that whatever measures are necessary for enforcement are, in future, much more widely and vigorously taken. On the other hand, we must see whether there are not ways in which the simple precautions open to all occupiers can be brought more widely to the notice of both tenants and owner-occupiers. If we can do something in those two directions, then I have every hope that I may not find myself answering a similar Adjournment debate in 1958.
Question put and agreed to.
Adjourned accordingly at fourteen minutes to Eleven o'clock.